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UNIVERSAL ANNUITY
PROSPECTUS
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This prospectus describes Universal Annuity, a flexible premium variable annuity
Contract (the "Contract") issued by The Travelers Insurance Company (the
"Company," "our", "us" or "we").
The Contract's value will vary daily to reflect the investment experience of the
funding options you select and the interest credited to the Fixed (Flexible
Annuity) Account. The variable funding options are:
MANAGED SEPARATE ACCOUNTS
Travelers Growth and Income Stock Account
("Account GIS")
Travelers Money Market Account
("Account MM")
Travelers Quality Bond Account
("Account QB")
Travelers Timed Aggressive Stock Account
("Account TAS")
Travelers Timed Growth and Income Stock Account ("Account TGIS")
Travelers Timed Short-Term Bond Account
("Account TSB")
TRAVELERS FUND U FOR VARIABLE ANNUITIES
Capital Appreciation Fund
Dreyfus Stock Index Fund
High Yield Bond Trust
Managed Assets Trust
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund
Emerging Opportunities Fund
Global High-Yield Bond Fund
Intermediate-Term Bond Fund
International Equity Fund
Long-Term Bond Fund
DREYFUS VARIABLE INVESTMENT FUND
Small Cap Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST(1)
Templeton Asset Strategy Fund (Class 1)(2)
Templeton Global Income Securities Fund
(Class 1)(3)
Templeton Growth Securities Fund
(Class 1)(4)
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio
MFS Total Return Portfolio
Putnam Diversified Income Portfolio
Smith Barney High Income Portfolio
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio
Social Awareness Stock Portfolio
U.S. Government Securities Portfolio
Utilities Portfolio
VARIABLE INSURANCE PRODUCTS FUND (FIDELITY)
Equity Income Portfolio -- Initial Class
Growth Portfolio -- Initial Class
High Income Portfolio -- Initial Class
VARIABLE INSURANCE PRODUCTS FUND II (FIDELITY)
Asset Manager Portfolio -- Initial Class
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(1) Formerly Templeton Variable Products Series Fund
(2) Formerly offered as Templeton Asset Allocation Fund (Class 1)
(3) Formerly offered as Templeton Bond Fund (Class 1)
(4) Formerly offered as Templeton Stock Fund (Class 1)
The Fixed Account is described in Appendix B. Unless specified otherwise, this
prospectus refers to the variable funding options. The contracts and/or some of
the funding options may not be available in all states. THIS PROSPECTUS IS VALID
ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE VARIABLE FUNDING
OPTIONS. READ AND RETAIN THEM FOR FUTURE REFERENCE.
This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about the Travelers Fund
U for Variable Annuities ("Separate Account") by requesting a copy of the
Statement of Additional Information ("SAI") dated May 1, 2000. The SAI has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this prospectus. To request a copy, write to The Travelers
Insurance Company, Annuity Investor Services, One Tower Square, Hartford,
Connecticut 06183, call 1-800-842-8573 or access the SEC's website
(http://www.sec.gov). See Appendix C for the SAI's table of contents.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
PROSPECTUS DATED MAY 1, 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary......................................... 3
Fee Table....................................... 6
Condensed Financial Information................. 9
The Variable Annuity Contract................... 10
Contract Owner Inquiries...................... 10
Purchase Payments............................. 10
Accumulation Units............................ 10
The Funding Options........................... 11
Charges and Deductions........................ 13
General..................................... 13
Withdrawal Charge........................... 14
Free Withdrawal Allowance................... 15
Administrative Charge....................... 15
Mortality and Expense Risk Charge........... 16
Funding Option Expenses..................... 16
Premium Tax................................. 16
Tactical Asset Allocation Services Fees..... 16
Managed Separate Account: Management and
Fees...................................... 16
Transfers..................................... 17
Dollar-Cost Averaging....................... 18
Asset Allocation Advice..................... 19
Tactical Asset Allocation Services............ 19
Tactical Asset Allocation Risks............. 19
Access to your Money.......................... 20
Systematic Withdrawals...................... 20
Ownership Provisions.......................... 21
Types of Ownership.......................... 21
Contract Owner............................ 21
Beneficiary............................... 21
Annuitant................................. 21
Death Benefit................................. 22
Death Proceeds Before the Maturity Date..... 22
Payment of Proceeds......................... 22
Death Proceeds after the Maturity Date...... 24
The Annuity Period.............................. 24
Maturity Date............................... 24
Allocation of Annuity....................... 24
Variable Annuity............................ 25
Fixed Annuity............................... 25
Payment Options............................... 25
Election of Options......................... 25
Annuity Options............................. 26
Income Options.............................. 27
Miscellaneous Contract Provisions............... 27
Right to Return............................. 27
Termination of Individual Contract.......... 28
Termination of Group Contract or Account.... 28
Distribution from One Account to Another.... 29
Required Reports............................ 29
Change of Contract.......................... 29
Assignment.................................. 29
Suspension of Payments...................... 30
Other Information............................... 30
The Insurance Company....................... 30
Financial Statements........................ 30
IMSA........................................ 30
Distribution of Variable Annuity
Contracts................................. 30
Conformity with State and Federal Laws...... 30
Voting Rights............................... 31
Legal Proceedings and Opinions.............. 31
The Separate Accounts........................... 32
Performance Information..................... 33
Federal Tax Considerations...................... 33
General Taxation of Annuities............... 33
Types of Contracts: Qualified or
Nonqualified.............................. 34
Nonqualified Annuity Contracts.............. 34
Qualified Annuity Contracts................. 34
Penalty Tax for Premature Distributions..... 35
Diversification Requirements................ 35
Ownership of the Investments................ 35
Mandatory Distributions for Qualified
Plans..................................... 35
Taxation of Death Benefit Proceeds.......... 36
Managed Separate Accounts....................... 36
The Travelers Growth and Income Stock Account... 37
The Travelers Quality Bond Account.............. 38
The Travelers Money Market Account.............. 39
The Travelers Timed Growth and Income Stock
Account....................................... 41
The Travelers Timed Short-Term Bond Account..... 41
The Travelers Timed Aggressive Stock Account.... 43
The Travelers Timed Bond Account................ 44
Investments, Practices and Risks of the Managed
Separate Accounts............................. 45
Investments at a Glance......................... 48
Appendix A (Condensed Financial Information).... A-1
Appendix B (The Fixed Account).................. B-1
Appendix C (Contents of Statement of Additional
Information).................................. C-1
</TABLE>
INDEX OF SPECIAL TERMS
The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.
<TABLE>
<S> <C>
Accumulation Unit............................... 10
Accumulation Period............................. 10
Annuitant....................................... 21
Annuity Payments................................ 10
Annuity Unit.................................... 10
Cash Surrender Value............................ 20
Cash Value...................................... 10
Contingent Annuitant............................ 21
Contract Date................................... 10
Contract Owner (You, Your)...................... 10
Contract Value.................................. 10
Contract Year................................... 10
Fixed Account................................... B-1
Funding Option(s)............................... 11
Income Payments................................. 10
Individual Account.............................. 10
Joint Owner..................................... 21
Managed Separate Account........................ 16
Maturity Date................................... 24
Owner........................................... 21
Participant's Interest.......................... 10
Purchase Payment................................ 10
Underlying Fund................................. 11
Written Request................................. 10
</TABLE>
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SUMMARY:
TRAVELERS UNIVERSAL ANNUITY
THIS SUMMARY DETAILS SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND
CONSIDER BEFORE PURCHASING THE CONTRACT. PLEASE READ THE ENTIRE PROSPECTUS
CAREFULLY.
CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE VARIABLE ANNUITY CONTRACT? The
Contract offered by the Travelers Insurance Company is intended for retirement
savings or other long-term investment purposes. The Contract provides a death
benefit as well as guaranteed payout options. You direct your payment(s) to one
or more of the variable funding options and/or to the Fixed Account. We
guarantee money directed to the Fixed Account as to principal and interest. The
variable funding options are designed to produce a higher rate of return than
the Fixed Account; however, this is not guaranteed. You can also lose money in
the variable funding options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase
generally, under a qualified contract, your pre-tax contributions accumulate on
a tax-deferred basis and are taxed as income when you make a withdrawal,
presumably when you are in a lower tax bracket. During the accumulation phase,
under a nonqualified contract, earnings on your after-tax contributions
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The payout phase occurs when you begin receiving payments from your
Contract. The amount of money you accumulate in your Contract determines the
amount of income (annuity payments) you receive during the payout phase.
During the payout phase, you may choose to receive annuity payments from the
Fixed Account or the variable funding options. If you want to receive payments
from your annuity, you can choose one of a number of annuity options or income
options.
Once you choose one of the annuity options or income options and begin to
receive payments, it cannot be changed. During the payout phase, you have the
same investment choices you had during the accumulation phase. If amounts are
directed to the variable funding options, the dollar amount of your payments may
increase or decrease.
WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with (1) individual nonqualified purchases; (2) Individual
Retirement Annuities (IRA) or IRA Rollovers pursuant to Section 408 of the
Internal Revenue Code of 1986, as amended; and (3) qualified retirement plans
("Plan") (which include contracts qualifying under Section 401(a), 403(b),
408(b) or 457 of the Internal Revenue Code. Purchase of this Contract through a
Plan does not provide any additional tax deferral benefits beyond those provided
by the Plan. Accordingly, if you are purchasing this Contract through a Plan,
you should consider purchasing the Contract for its Death Benefit, Annuity
Option Benefits or other non-tax related benefits.
You may purchase a qualified Contract with an initial payment of at least $20,
except in the case of an IRA, for which the minimum initial payment is $1,000.
Under a qualified Contract, you may make additional payments of at least $20.
For nonqualified Contracts, the minimum initial purchase payment is $1,000, and
$100 thereafter.
WHO IS THE CONTRACT ISSUED TO? If you purchase an individual Contract, you are
the contract owner. If a group "allocated" contract is purchased, we issue
certificates to the individual participants. Where we refer to "you," we are
referring to the individual contract owner, or to the group participant, as
applicable. For convenience, we refer to both contracts and certificates as
"Contracts."
We issue group contracts in connection with retirement plans. Depending on your
retirement plan provisions, certain features and/or funding options described in
this prospectus may not be available to you (for example, dollar-cost averaging,
(the CHART program, etc.). Your retirement
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plan provisions supercede the prospectus. If you have any questions about your
specific retirement plan, contact your plan administrators.
IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you will receive a full refund of the contract value
(including charges). Where state law requires a longer right to return period,
or the return of purchase payments, the Company will comply. You bear the
investment risk on the purchase payment during the right to return period;
therefore, the Contract value returned may be greater or less than your purchase
payment.
If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your full purchase payment
will be refunded. During the remainder of the right to return period, the
Contract value (including charges) will be refunded. The Contract value will be
determined at the close of business on the day we receive a written request for
a refund.
WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
the Fixed Account or any or all of the funding options shown on the cover page.
The funding options are described in the prospectuses for the funds. Depending
on market conditions, you may make or lose money in any of these options.
The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Standard and Nonstandard performance is shown in the Statement of
Additional Information that you may request free of charge.
You can transfer between the funding options as frequently as you wish without
any current tax implications. Currently there is no charge for transfers, nor a
limit to the number of transfers allowed. We may, in the future, charge a fee
for any transfer request, or limit the number of transfers allowed. At a
minimum, we would always allow one transfer every six months. We reserve the
right to restrict transfers that we determine will disadvantage other contract
owners. You may transfer between the Fixed Account and the funding options twice
a year (during the 30 days after the six-month contract date anniversary),
provided the amount is not greater than 15% of the Fixed Account Value on that
date.
WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. For each
contract we deduct a semiannual administrative charge of $15. The annual
insurance charge is 1.25% of the amounts you direct to the variable funding
options. Each funding option also charges for management, any applicable asset
allocation fee and other expenses. Please refer to the Fee Table for more
information about the charges.
If you withdraw amounts from the Contract, we may deduct a withdrawal charge.
The charge equals 5% of each purchase payment if withdrawn within 5 years of the
payment date. If you withdraw all amounts under the Contract, or if you begin
receiving annuity/income payments, the Company may be required by your state to
deduct a premium tax.
HOW WILL MY CONTRIBUTIONS AND WITHDRAWALS BE TAXED? Generally, the payments you
make to a qualified Contract during the accumulation phase are made with
before-tax dollars. You will be taxed on your purchase payments and on any
earnings when you make a withdrawal or begin receiving annuity or income
payments. Under a nonqualified Contract, payments to the contract are made with
after-tax dollars, and any credits and earnings will accumulate tax-deferred.
You will be taxed on these earnings when they are withdrawn from the Contract.
For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the amount
withdrawn.
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HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. Withdrawal charges, income taxes, and/or a penalty tax may
apply to taxable amounts withdrawn.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? The death benefit applies upon
the first death of the owner, joint owner or annuitant. Assuming you are the
annuitant, if you die before you move to the income phase, the person you have
chosen as your beneficiary will receive a death benefit. The death benefit paid
depends on your age at the time of your death. The death benefit is calculated
as of the close of the business day on which the Company's Home Office receives
due proof of death.
Any amount paid will be reduced by any applicable premium tax, outstanding loans
or surrenders not previously deducted. Certain states may have varying age
requirements. Please refer to the Death Benefit section of the prospectus for
more details.
ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:
- DOLLAR COST AVERAGING. This is a program that allows you to invest a
fixed amount of money in funding options each month, theoretically
giving you a lower average cost per unit over time than a single
one-time purchase. Dollar Cost Averaging requires regular investments
regardless of fluctuating price levels, and does not guarantee profits
or prevent losses in a declining market. Potential investors should
consider their financial ability to continue purchases through periods
of low price levels.
- TACTICAL ASSET ALLOCATION PROGRAM. If allowed, you may elect to enter
into a separate Tactical Asset Allocation services agreement with
registered investment advisers who provide Tactical Asset Allocation
services. These agreements permit the registered investment advisers
to act on your behalf by transferring all or a portion of the cash
value from one Market Timed Account to another. The registered
investment advisers can transfer funds only from one Market Timed
Account to another Market Timed Account. Purchase payments are
allocated to the following funding options when you participate in the
Tactical Asset Allocation Program: Travelers Timed Growth and Income
Stock Account; Travelers Timed Short-Term Bond Account and Travelers
Timed Aggressive Stock Account. The Tactical Asset Allocation Program
and applicable fees are fully described in a separate Disclosure
Statement.
- ASSET ALLOCATION ADVICE. If allowed, you may elect to enter into a
separate advisory agreement with Copeland Financial Services, LLC
("Copeland"), an affiliate of the Company, for the purpose of
receiving asset allocation advice under Copeland's CHART Program. The
CHART Program allocates all purchase payments among the American
Odyssey Funds. The CHART Program and applicable fees are fully
described in a separate disclosure statement.
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FEE TABLE
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ACCOUNTS GIS, QB, MM, TGIS, TSB, TAS AND TB
FUND U AND ITS UNDERLYING FUNDS
CONTRACT CHARGES AND EXPENSES
<TABLE>
<S> <C>
CONTINGENT DEFERRED SALES CHARGE (as a percentage of
purchase payments withdrawn)
If withdrawn within 5 years after the purchase
payment is made...................................... 5.00%
If withdrawn 5 or more years after the purchase
payment is made...................................... 0%
SEMIANNUAL CONTRACT ADMINISTRATIVE CHARGE.............. $15
ANNUAL SEPARATE ACCOUNT EXPENSES
MORTALITY AND EXPENSE RISK CHARGE (as a percentage of
average net assets of
Managed Separate Accounts and Fund U)............... 1.25%
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the funding option
as of December 31, 1999, unless otherwise noted.)
</TABLE>
<TABLE>
<CAPTION>
MANAGEMENT MARKET ANNUAL
INVESTMENT ALTERNATIVE FEE TIMING FEE(1) EXPENSES(2)
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<S> <C> <C> <C>
MANAGED SEPARATE ACCOUNTS
Travelers Growth and Income Stock Account for
Variable Annuities (GIS)....................... 0.60% 0.60%
Travelers Money Market Account for Variable
Annuities (MM)................................. 0.32% 0.32%
Travelers Quality Bond Account for Variable
Annuities (QB)................................. 0.32% 0.32%
Travelers Timed Aggressive Stock Account for
Variable Annuities (TAS)....................... 0.35% 1.25% 1.60%
Travelers Timed Bond Account for Variable
Annuities (TB)*................................ 0.50% 1.25% 1.75%
Travelers Timed Growth and Income Stock for
Variable Annuities (TGIS)...................... 0.32% 1.25% 1.57%
Travelers Timed Short-Term Bond Account for
Variable Annuities (TSB)....................... 0.32% 1.25% 1.57%
</TABLE>
<TABLE>
<CAPTION>
TOTAL
ANNUAL OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
REIMBURSEMENT) REIMBURSEMENT) REIMBURSEMENT)
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<S> <C> <C> <C>
UNDERLYING FUNDING OPTIONS
Capital Appreciation Fund............................ 0.75% 0.08% 0.83%
Dreyfus Stock Index Fund............................. 0.25% 0.01% 0.26%
High Yield Bond Trust................................ 0.50% 0.31% 0.81%
Managed Assets Trust................................. 0.50% 0.10% 0.60%
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund................................. 0.56% 0.08% 0.64%
Emerging Opportunities Fund...................... 0.75% 0.12% 0.87%
Global High-Yield Bond Fund...................... 0.67% 0.16% 0.83%
Intermediate-Term Bond Fund...................... 0.49% 0.10% 0.59%
International Equity Fund........................ 0.59% 0.13% 0.72%
Long-Term Bond Fund.............................. 0.50% 0.10% 0.60%
AMERICAN ODYSSEY FUNDS, INC.**
Core Equity Fund................................. 0.56% 1.33% 1.89%
Emerging Opportunities Fund...................... 0.75% 1.37% 2.12%
Global High-Yield Bond Fund...................... 0.67% 1.41% 2.08%
Intermediate-Term Bond Fund...................... 0.49% 1.35% 1.84%
International Equity Fund........................ 0.59% 1.38% 1.97%
Long-Term Bond Fund.............................. 0.50% 1.35% 1.85%
DREYFUS VARIABLE INVESTMENT FUND
Small Cap Portfolio.............................. 0.75% 0.03% 0.78%
</TABLE>
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<TABLE>
<CAPTION>
TOTAL
ANNUAL OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
REIMBURSEMENT) REIMBURSEMENT) REIMBURSEMENT)
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<S> <C> <C> <C>
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Templeton Asset Strategy Fund - Class 1 (formerly
offered as Templeton Asset Allocation Fund).... 0.60% 0.18% 0.78%(3)
Templeton Global Income Securities Fund - Class 1
(formerly offered as Templeton Bond Fund)...... 0.60% 0.05% 0.65%(4)
Templeton Growth Securities Fund - Class 1
(formerly offered as Templeton Stock Fund)..... 0.83% 0.05% 0.88%(5)
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio........................ 0.80% 0.02% 0.82%(6)
INVESCO Strategic Income Portfolio* (formerly
G.T. Global Strategic Income Portfolio)........ 0.80% 0.33% 1.13%(6)
MFS Total Return Portfolio....................... 0.80% 0.04% 0.84%(6)
Putnam Diversified Income Portfolio.............. 0.75% 0.08% 0.83%(6)
Smith Barney High Income Portfolio............... 0.60% 0.06% 0.66%(6)
Smith Barney International Equity Portfolio...... 0.90% 0.10% 1.00%(6)
Smith Barney Large Cap Value Portfolio........... 0.65% 0.02% 0.67%(6)
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio.............. 0.70% 0.25% 0.95%(7)
Social Awareness Stock Portfolio................. 0.64% 0.16% 0.80%
U.S. Government Securities Portfolio............. 0.32% 0.16% 0.48%
Utilities Portfolio.............................. 0.65% 0.23% 0.88%
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio - Initial Class.......... 0.48% 0.08% 0.56%(8)
Growth Portfolio - Initial Class................. 0.58% 0.07% 0.65%(8)
High Income Portfolio - Initial Class............ 0.58% 0.11% 0.69%
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio - Initial Class.......... 0.53% 0.09% 0.62%(8)
</TABLE>
NOTES:
The purpose of this Fee Table is to help you understand the various costs and
expenses that you will bear, directly or indirectly, under the Contract. The
information, except as noted, reflects expenses of the managed separate accounts
as well as Fund U and its funding options for the fiscal year ending December
31, 1999. For additional information, including possible waivers or reductions
of these expenses, see "Charges and Deductions." Expenses shown do not include
premium taxes, which may apply. "Other Expenses" include operating costs of the
separate account or fund. These expenses are reflected in each Fund's net asset
value and are not deducted from the account value under the Contract.
* Not available to new Contract Owners.
** Includes 1.25% CHART asset allocation fee.
(1) Contract Owners may discontinue tactical asset allocation services at any
time and thereby avoid any subsequent fees for those services by
transferring to a non-timed account.
(2) These figures do not include the mortality and expense risk fee which is
deducted from the daily unit values of the separate account.
(3) On 2/8/00, fund shareholders approved a merger and reorganization to merge
the assets of TEMPLETON GLOBAL ASSET ALLOCATION FUND into TEMPLETON ASSET
ALLOCATION FUND (which then changed its name to TEMPLETON ASSET STRATEGY
FUND), effective 5/1/00. The table shows restated total expenses based upon
the new fees and assets of Templeton Asset Allocation Fund as of 12/31/99,
and not the assets of the combined fund on 5/1/00. However if the table
reflected both the new fees and the combined assets, the fund's expenses
after 5/1/00 would be estimated as: Management Fees 0.60%, Other expenses
0.14% and Total Fund Operating Expenses 0.74%.
(4) On 2/8/00, a merger and reorganization was approved to merge the assets of
TEMPLETON BOND FUND into TEMPLETON GLOBAL INCOME SECURITIES FUND, effective
5/1/00. The above table shows restated total expenses based upon the fees
and assets of TEMPLETON GLOBAL INCOME SECURITIES FUND as of 12/31/99, and
not the assets of the combined fund on 5/1/00. However if the table
reflected the combined assets, the fund's expenses after 5/1/00 would be
estimated as: Management Fees 0.60%, Other expenses 0.04% and Total Fund
Operating Expenses 0.64%. The Fund's administration fee is paid indirectly
through the management fee.
(5) On 2/8/00, a merger and reorganization was approved to merge the assets of
TEMPLETON STOCK FUND into TEMPLETON GLOBAL GROWTH FUND (which then changed
its name to TEMPLETON GROWTH SECURITIES FUND), effective 5/1/00. The above
table shows restated total expenses based upon the fees and assets of
TEMPLETON GLOBAL GROWTH FUND as of 12/31/99, and not the assets of the
combined fund on 5/1/00. However if the table reflected the combined assets,
the fund's expenses after 5/1/00 would be estimated as: Management Fees
0.80%, Other expenses 0.05% and Total Fund Operating Expenses 0.85%. The
Fund's administration fee is paid indirectly through the management fee.
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(6) Expenses are as of October 31, 1999 (the Fund's fiscal year end). There were
no fees waived or expenses reimbursed for these funds in 1999.
(7) Other Expenses reflect the current expense reimbursement arrangement with
Travelers Insurance Company. Travelers has agreed to reimburse the Portfolio
for the amount by which their aggregate expenses (including management fees,
but excluding brokerage commissions, interest charges and taxes) exceeds
0.95%. Without such arrangements, the Total Annual Operating Expenses for
the Portfolio would have been 0.99% for the DISCIPLINED MID CAP STOCK
PORTFOLIO.
(8) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain funds,
or FMR on behalf of certain funds, custodian, credits realized as a result
of uninvested cash balances were used to reduce a portion of each applicable
fund 's expenses. Without these reductions, the total operating expenses
presented in the table would have been 0.57% for EQUITY-INCOME PORTFOLIO,
0.66% for GROWTH PORTFOLIO, and 0.63% for ASSET MANAGER PORTFOLIO.
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EXAMPLE*
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
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<TABLE>
<CAPTION>
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN ANNUITIZED AT END OF PERIOD SHOWN:
------------------------------------- -------------------------------------
INVESTMENT ALTERNATIVE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGED SEPARATE ACCOUNTS
Account GIS.......................... $70 $112 $156 $229 $20 $ 62 $106 $229
Account MM........................... 67 103 141 199 17 53 91 199
Account QB........................... 67 103 141 199 17 53 91 199
Account TAS.......................... 80 142 206 328 30 92 156 328
Account TB**......................... 81 146 213 342 31 96 163 342
Account TGIS......................... 80 141 204 325 30 91 154 325
Account TSB.......................... 80 141 204 325 30 91 154 325
UNDERLYING FUNDING OPTIONS
Capital Appreciation Fund............... 72 119 168 253 22 69 118 253
Dreyfus Stock Index Fund................ 66 101 138 192 16 51 88 192
High Yield Bond Trust................... 72 118 167 251 22 68 117 251
Managed Assets Trust.................... 70 112 156 229 20 62 106 229
AMERICAN ODYSSEY FUNDS, INC.(1)
Core Equity Fund..................... 70 113 158 233 20 63 108 233
Emerging Opportunities Fund.......... 73 120 170 257 23 70 120 257
Global High-Yield Bond Fund.......... 72 119 168 253 22 69 118 253
Intermediate-Term Bond Fund.......... 70 111 155 228 20 61 105 228
International Equity Fund............ 71 115 162 241 21 65 112 241
Long-Term Bond Fund.................. 70 112 156 229 20 62 106 229
AMERICAN ODYSSEY FUNDS, INC.(2)
Core Equity Fund..................... 83 150 220 355 33 100 170 355
Emerging Opportunities Fund.......... 85 157 231 376 35 107 181 376
Global High-Yield Bond Fund.......... 85 156 229 372 35 106 179 372
Intermediate-Term Bond Fund.......... 82 149 217 351 32 99 167 351
International Equity Fund............ 84 152 224 362 34 102 174 362
Long-Term Bond Fund.................. 82 149 218 351 32 99 168 351
DREYFUS VARIABLE INVESTMENT FUND
Small Cap Portfolio.................. 72 117 165 247 22 67 115 247
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund - Class
1.................................. 72 117 165 247 22 67 115 247
Templeton Global Income Securities
Fund - Class 1..................... 70 113 158 234 20 63 108 233
Templeton Growth Securities Fund -
Class 1............................ 73 120 170 258 23 70 120 258
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio............ 72 118 167 252 22 68 117 252
INVESCO Strategic Income
Portfolio**........................ 75 128 183 283 25 78 133 283
MFS Total Return Portfolio........... 72 119 168 254 22 69 118 254
Putnam Diversified Income
Portfolio.......................... 72 119 168 253 22 69 118 253
Smith Barney High Income Portfolio... 71 113 159 235 21 63 109 235
Smith Barney International Equity
Portfolio.......................... 74 124 176 270 24 74 126 270
Smith Barney Large Cap Value
Portfolio.......................... 71 114 159 236 21 64 109 236
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock
Portfolio.......................... 73 122 174 265 23 72 124 265
Social Awareness Stock Portfolio..... 72 118 166 250 22 68 116 250
U.S. Government Securities
Portfolio.......................... 69 108 150 216 19 58 100 216
Utilities Portfolio.................. 73 120 170 258 23 70 120 258
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio - Initial
Class.............................. 70 110 154 225 20 60 104 225
Growth Portfolio - Initial Class..... 70 113 158 234 20 63 108 234
High Income Portfolio - Initial
Class.............................. 71 114 160 238 21 64 110 238
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio - Initial
Class.............................. 70 112 157 231 20 62 107 231
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
EXAMPLE REFLECTS THE $15 SEMIANNUAL CONTRACT FEE AS AN ANNUAL CHARGE OF
0.1125% OF ASSETS.
** Not currently available to new Contract Owners.
(1) Reflects expenses that would be incurred for those Contract Owners who DO
NOT participate in the CHART Asset Allocation Program.
(2) Reflects expenses that would be incurred for those Contract Owners who DO
participate in the CHART Asset Allocation Program.
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
See Appendix A.
9
<PAGE> 10
THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Travelers Universal Annuity is a contract between the contract owner ("you"),
and The Travelers Insurance Company (called "us" or the "Company"). You make
purchase payments to us and we credit them to your Contract. The Company
promises to pay you an income, in the form of annuity or income payments,
beginning on a future date that you choose, the maturity date. The purchase
payments accumulate tax deferred in the funding options of your choice. We offer
multiple variable funding options, and one fixed account option. The contract
owner assumes the risk of gain or loss according to the performance of the
variable funding options. The cash value is the amount of purchase payments,
plus or minus any investment experience or interest. The contract value also
reflects all surrenders made and charges deducted. There is generally no
guarantee that at the maturity date the cash value will equal or exceed the
total purchase payments made under the Contract. The date the contract and its
benefits become effective is referred to as the contract date. Each 12-month
period following the contract date is called a contract year. The record of
accumulation units credited to an owner is called the owner's account. The
record of accumulation units credited to an owner is called the individual
account or participant's interest.
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to us.
CONTRACT OWNER INQUIRIES
Any questions you have about your Contract should be directed to the Company's
Home Office at 1-800-842-8573.
PURCHASE PAYMENTS
The initial purchase payment must be paid before the Contract becomes effective.
Minimum purchase payment amounts are:
- IRAs: $1,000
- Other tax-qualified retirement plans: $20 per participant (subject to plan
requirements)
- Nonqualified contracts: $1,000; minimum of $100 for subsequent payment
We will apply the initial purchase payment within two business days after we
receive it in good order at our Home Office. Subsequent purchase payments
received in good order will be credited within one business day, if received in
good order by our Home Office by 4:00 p.m. Eastern time. A business day is any
day that the New York Stock Exchange is open. Our business day ends at 4:00 p.m.
Eastern time, unless we need to close earlier due to an emergency.
ACCUMULATION UNITS
The period between the contract effective date and the maturity date is the
accumulation period. During the accumulation period, an accumulation unit is
used to calculate the value of a Contract. An accumulation unit works like a
share of a mutual fund. Each funding option has a corresponding accumulation
unit value. The accumulation units are valued each business day and their values
may increase or decrease from day to day. The number of accumulation units we
will credit to your Contract once we receive a purchase payment is determined by
dividing the amount directed to each funding option by the value of its
accumulation unit. We calculate the value of an accumulation unit for each
funding option each day the New York Stock Exchange is open. The values are
calculated as of 4:00 p.m. Eastern time. After the value is calculated, we
credit your Contract. During the annuity period (i.e., after the maturity date),
you are credited with annuity units.
10
<PAGE> 11
THE FUNDING OPTIONS
You choose which of the following variable funding options to have your purchase
payments allocated to. These include the managed separate accounts and the
subsections of the Separate Account, which invest in the underlying mutual funds
("underlying funds"). You will find detailed information about the options and
their inherent risks in the current prospectuses for the funding options which
must accompany this prospectus. The Company has entered into agreements with
either the investment adviser or distributor of certain of the underlying funds
in which the adviser or distributor pays us a fee for providing administrative
services, which fee may vary. The fee is ordinarily based upon an annual
percentage of the average aggregate net amount invested in the underlying funds
on behalf of the Separate Account. You are not investing directly in the
underlying fund. Since each option has varying degrees of risk, please read the
prospectuses carefully before investing. Contact your registered representative
or call 1-800-842-8573 to request additional copies of the prospectuses.
If any of the funding options becomes unavailable for allocating purchase
payments, or if we believe that further investment in a funding option is
inappropriate for the purposes of the Contract, we may substitute another
funding option. However, we will not make any substitutions without notifying
you and obtaining any state and SEC approval, if necessary. From time to time we
may make new funding options available.
The current variable funding options are listed below, along with their
investment advisers and any subadviser:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANAGED SEPARATE ACCOUNTS
Travelers Growth and Seeks long-term accumulation of principal through Travelers Asset Management
Income Stock Account capital appreciation and retention of net investment International Company LLC
income. ("TAMIC") Subadviser: The
Travelers Investment
Management Company
("TIMCO")
Travelers Money Market Seeks preservation of capital, a high degree of TAMIC
Account liquidity and the highest possible current income
available from certain short-term money market
securities.
Travelers Quality Bond Seeks current income, moderate capital volatility and TAMIC
Account total return.
Travelers Timed Seeks growth of capital by investing primarily in a TIMCO
Aggressive Stock Account broadly diversified portfolio of common stocks.
Travelers Timed Growth Seeks long-term accumulation of principal through TIMCO
and Income Stock capital appreciation and retention of net investment
income.
Travelers Timed Seeks high current income with limited price volatility. TIMCO
Short-Term Bond Account
FUND U FUNDING OPTIONS
Capital Appreciation Fund Seeks growth of capital through the use of common TAMIC
stocks. Income is not an objective. The Fund invests Subadviser: Janus Capital
principally in common stocks of small to large companies Corp.
which are expected to experience wide fluctuations in
price in both rising and declining markets.
Dreyfus Stock Index Fund Seeks to provide investment results that correspond to Mellon Equity Securities
the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the
Standard & Poor's 500 Composite Stock Price Index.
High Yield Bond Trust Seeks generous income. The assets of the High Yield Bond TAMIC
Trust will be invested in bonds which, as a class, sell
at discounts from par value and are typically high risk
securities.
Managed Assets Trust Seeks high total investment return through a fully TAMIC Subadviser: TIMCO
managed investment policy in a portfolio of equity, debt
and convertible securities.
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund Seeks maximum long-term total return by investing American Odyssey Funds
primarily in common stocks of well-established Management, Inc.
companies. Subadvisers: Equinox
Capital Management, LLC;
Putnam Investment
Management Inc.; and State
Street Global Advisors.
Emerging Opportunities Seeks maximum long-term total return by investing American Odyssey Funds
Fund primarily in common stocks of small, rapidly growing Management, Inc.
companies. Subadvisers: SG Cowen
Asset Management;
Chartwell Investment
Partners; and State Street
Global Advisors.
Global High-Yield Bond Seeks maximum long-term total return (capital American Odyssey Funds
Fund appreciation and income) by investing primarily in Management, Inc.
high-yield debt securities from the United States and Subadviser: Credit Suisse
abroad. Asset Management
Intermediate-Term Bond Seeks maximum long-term total return by investing American Odyssey Funds
Fund primarily in intermediate-term corporate debt Management, Inc.
securities, U.S. government securities, mortgage-related Subadviser: TAMIC
securities and asset-backed securities, as well as money
market instruments.
International Equity Fund Seeks maximum long-term total return by investing American Odyssey Funds
primarily in common stocks of established non-U.S. Management, Inc.
companies. Subadviser: Bank of
Ireland Asset Management
(U.S.) Limited
Long-Term Bond Fund Seeks maximum long-term total return by investing American Odyssey Funds
primarily in long-term corporate debt securities, U.S. Management, Inc.
government securities, mortgage-related securities, and Subadviser: Western Asset
asset-backed securities, as well as money market Management Company
instruments.
DREYFUS VARIABLE INVESTMENT FUND
Small Cap Portfolio Seeks to maximize capital appreciation. The Dreyfus Corporation
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Templeton Asset Strategy Seeks a high level of total return with reduced risk Templeton Investment
Fund (Class 1) over the long term through a flexible policy of Counsel, Inc.
investing in stocks of companies in any nation and debt
obligations of companies and governments of any nation.
Templeton Global Income Seeks high current income by investing primarily in debt Franklin Advisers, Inc.
Securities Fund (Class 1) securities of companies, governments and government Subadviser: Templeton
agencies of various nations throughout the world. Investment Counsel, Inc.
Templeton Growth Seeks capital growth by investing primarily in common Templeton Global Advisors
Securities Fund (Class 1) stocks issued by companies, large and small, in various Limited
nations throughout the world.
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio Seeks long-term growth of capital by investing Travelers Investment
predominantly in equity securities of companies with a Adviser ("TIA")
favorable outlook for earnings and whose rate of growth Subadviser: Alliance
is expected to exceed that of the U.S. economy over Capital Management L.P.
time. Current income is only an incidental
consideration.
MFS Total Return Seeks to obtain above-average income (compared to a TIA Subadviser:
Portfolio portfolio entirely invested in equity securities) Massachusetts Financial
consistent with the prudent employment of capital. Services Company ("MFS")
Generally, at least 40% of the Portfolio's assets will
be invested in equity securities.
Putnam Diversified Income Seeks high current income consistent with preservation TIA Subadviser: Putnam
Portfolio of capital. The Portfolio will allocate its investments Investment Management,
among the U.S. Government Sector, the High Yield Sector, Inc.
and the International Sector of the fixed income
securities markets.
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRAVELERS SERIES FUND INC.
Smith Barney High Income Seeks high current income. Capital appreciation is a SSB Citi Fund Management
Portfolio secondary objective. The Portfolio will invest at least LLC ("SSB Citi")
65% of its assets in high-yielding corporate debt
obligations and preferred stock.
Smith Barney Seeks total return on assets from growth of capital and SSB Citi
International Equity income by investing at least 65% of its assets in a
Portfolio diversified portfolio of equity securities of
established non-U.S. issuers.
Smith Barney Large Cap Seeks current income and long-term growth of income and SSB Citi
Value Portfolio capital by investing primarily, but not exclusively, in
common stocks.
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Seeks growth of capital by investing primarily in a TAMIC Subadvisor: TIMCO
Portfolio broadly diversified portfolio of common stocks.
Social Awareness Stock Seeks long-term capital appreciation and retention of SSB Citi
Portfolio net investment income by selecting investments,
primarily common stocks, which meet the social criteria
established for the Portfolio. Social criteria currently
excludes companies that derive a significant portion of
their revenues from the production of tobacco, tobacco
products, alcohol, or military defense systems, or in
the provision of military defense related services or
gambling services.
U.S. Government Seeks to select investments from the point of view of an TAMIC
Securities Portfolio investor concerned primarily with highest credit
quality, current income and total return. The assets of
the U.S. Government Securities Portfolio will be
invested in direct obligations of the United States, its
agencies and instrumentalities.
Utilities Portfolio Seeks to provide current income by investing in equity SSB Citi
and debt securities of companies in the utility
industries.
VARIABLE INSURANCE PRODUCTS
Equity Income Portfolio-- Seeks reasonable income by investing primarily in Fidelity Management &
Initial Class income- producing equity securities, in choosing these Research Company ("FMR")
securities, the portfolio manager will also consider the
potential for capital appreciation.
Growth Portfolio--Initial Seeks capital appreciation by purchasing common stocks FMR
Class of well-known, established companies, and small emerging
growth companies, although its investments are not
restricted to any one type of security. Capital
appreciation may also be found in other types of
securities, including bonds and preferred stocks.
High Income Portfolio-- Seeks to obtain a high level of current income by FMR
Initial Class investing primarily in high yielding, lower-rated,
fixed-income securities, while also considering growth
of capital.
VARIABLE INSURANCE PRODUCTS II
Asset Manager Portfolio-- Seeks high total return with reduced risk over the FMR
Initial Class long-term by allocating its assets among stocks, bonds
and short-term fixed-income instruments.
</TABLE>
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts. Services and benefits we provide include:
- the ability for you to make withdrawals and surrenders under the
Contracts;
- the death benefit paid on the death of the contract owner, annuitant, or
first of the joint owners,
- the available funding options and related programs (including dollar-cost
averaging, portfolio rebalancing, and systematic withdrawal programs);
13
<PAGE> 14
- administration of the annuity options available under the Contracts; and
- the distribution of various reports to contract owners.
Costs and expenses we incur include:
- losses associated with various overhead and other expenses associated
with providing the services and benefits provided by the Contracts,
- sales and marketing expenses including commission payments to your
Travelers sales agent, and
- other costs of doing business.
Risks we assume include:
- that annuitants may live longer than estimated when the annuity factors
under the Contracts were established;
- that the amount of the death benefit will be greater than the contract
value, and
- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
We may also deduct a charge for taxes.
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
We may reduce or eliminate the withdrawal charge, the administrative charges
and/or the mortality and expense risk charge under the Contract when certain
sales or administration of the Contract result in savings or reduced expenses
and/or risks. For certain trusts, we may change the order in which purchase
payments and earnings are withdrawn in order to determine the withdrawal charge.
We will not reduce or eliminate the withdrawal charge or the administrative
charge where such reduction or elimination would be unfairly discriminatory to
any person.
WITHDRAWAL CHARGE
We do not deduct a sales charge from purchase payments when they are made to the
Contract. However, a withdrawal charge (deferred sales charge) of 5% will apply
if a purchase payment is withdrawn within five years of its payment date. This
deferred sales charge is deducted only from purchase payments withdrawn, not on
growth. For this calculation, the five years is measured from the first day of
the month the payment is made.
In the case of a partial withdrawal, payments made first will be considered to
be withdrawn first ("first in, first out"). In no event may the withdrawal
charge exceed 5% of premiums paid in the five years immediately preceding the
withdrawal date, nor may the charge exceed 5% of the amount withdrawn. Unless
the Company receives instructions to the contrary, the withdrawal charge will be
deducted from the amount requested.
For purposes of the withdrawal charge calculation, withdrawals will be deemed to
be taken first from:
(a) any purchase payments to which no withdrawal charge applies; then
(b) from any remaining free withdrawal allowance (as described below)
after reduction by the amount of (a); then
(c) from any purchase payments to which withdrawal charges apply (on
a first-in, first-out basis); and, finally
(d) from any Contract earnings.
NOTE: Any free withdrawals taken will not reduce purchase payments still subject
to a withdrawal charge.
14
<PAGE> 15
We will not deduct a withdrawal charge (1) from the distribution of death
proceeds; or (2) after the first contract year, upon election of an annuity
payout (based upon life expectancy); or (3) made due to minimum distribution
requirements.
The withdrawal charge will be waived if:
- - an annuity payout is begun;
- - an income option of at least three years' duration (without right of
withdrawal) is begun after the first contract year;
- - the participant under a group Contract or annuitant under an individual
Contract dies;
- - the participant under a group Contract or annuitant under an individual
Contract becomes disabled (as defined by the Internal Revenue Service)
subsequent to purchase of the Contract;
- - the participant under a group Contract, or annuitant under an individual
Contract, under a tax-deferred annuity plan (403(b) plan) retires after age
55, provided the Contract has been in effect five years or more and provided
the payment is made to the contract owner or participant, as provided in the
plan;
- - the participant under a group Contract, or annuitant under an individual
Contract, under an IRA plan reaches age 70 1/2, provided the certificate, has
been in effect five years or more;
- - the participant under a group Contract, or annuitant under an individual
Contract, under a qualified pension or profit-sharing plan (including a 401(k)
plan) retires at or after age 59 1/2, provided the certificate or Contract, as
applicable has been in effect five years or more; or if refunds are made to
satisfy the anti-discrimination test. (For those under Certificates issued
before May 1, 1992, the withdrawal charge will also be waived if the
participant or annuitant retires at normal retirement age (as defined by the
Plan), provided the Certificate or Contract, as applicable has been in effect
one year or more);
- - the participant under a Section 457 deferred compensation plan retires and the
Certificate has been in effect five years or more, or if a financial hardship
or disability withdrawal has been allowed by the Plan administrator under
applicable Internal Revenue Service ("IRS") rules;
- - for group Contracts, the participant under a Section 457 deferred compensation
plan established by the Deferred Compensation Board of the state of New York
or a "public employer" in that state (as defined in Section 5 of the New York
State Finance Laws) terminates employment. The withdrawal charge will also be
waived for such a plan at the termination date specified in the Contract; or
- - for group Contracts, the participant under a pension or profit-sharing plan,
including a 401(k) plan, Section 457 deferred compensation plan, or a tax
deferred annuity plan (403(b) plan) that is subject to the Employee Retirement
Income Security Act of 1974 ("ERISA") retires at normal retirement age (as
defined by the plan) or terminates employment, provided that the contract
owner purchases this Contract in conjunction with a group unallocated flexible
annuity contract issued by the Company.
FREE WITHDRAWAL ALLOWANCE
Beginning in the second contract year, you may withdraw up to 10% of the cash
value annually. We calculate the available withdrawal amount as of the end of
the previous Contract year. The free withdrawal provision applies to all partial
withdrawals. We reserve the right to not permit the provision on a full
surrender. In Washington state, the free withdrawal provision applies to all
withdrawals.
ADMINISTRATIVE CHARGE
We deduct a semiannual administrative charge of $15 for each individual account
maintained. The administrative charge will be deducted from the account in June
and December of each year. The first charge will be prorated (i.e. calculated)
from the date of purchase. A prorated charge will also be made if the Contract
is completely withdrawn or terminated. This charge does not apply after
15
<PAGE> 16
an annuity payout has begun. The administrative charge will be deducted from the
cash value by canceling accumulation units in each funding option on a pro rata
basis. This charge will not be deducted from amounts held in the Fixed Account.
MORTALITY AND EXPENSE RISK CHARGE
Each business day, the Company deducts a mortality and expense risk ("M&E")
charge from amounts held in the Separate Accounts. This charge, on an annual
basis, is 1.25% of the Separate Account value. (This charge equals 0.003425% for
each business day.) We reserve the right to lower this charge at any time. This
charge compensates the Company for various risks assumed, benefits provided and
expenses incurred, including commission payments to Travelers sales agents.
FUNDING OPTION EXPENSES
The charges and expenses of the funding options are summarized in the fee table
and are described in the accompanying prospectuses.
PREMIUM TAX
Certain state and local governments charge premium taxes ranging from 0% to 5%
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred. We
will deduct any applicable premium taxes from the cash value either upon death,
surrender, annuitization, or at the time purchase payments are made to the
Contract, but no earlier than when we have a tax liability under state law.
TACTICAL ASSET ALLOCATION SERVICES FEES
In connection with the Tactical Asset Allocation services provided to
participants in Accounts TGIS, TSB and TAS, Copeland receives a fee equal on an
annual basis to 1.25% of the current value of the assets subject to the program.
The Company deducts this fee daily from the assets of the Market Timed Accounts.
Copeland also charges a $30 tactical asset allocation application fee.
Participants may discontinue Tactical Asset Allocation services at any time and
avoid any subsequent fees for those services by transferring to a non-timed
account. (See "Tactical Asset Allocation Services.")
MANAGED SEPARATE ACCOUNTS: MANAGEMENT AND FEES
The investments and administration of each managed separate account are under
the direction of a Board of Managers. Subject to the authority of each Board of
Managers, TIMCO and TAMIC furnish investment management and advisory services as
indicated in the Investment Option Chart. Additionally, the Board of Managers
for each managed separate account annually selects an independent public
accountant, reviews the terms of the management and investment advisory
agreements, recommends any changes in the fundamental investment policies (and
submits any such changes to contract owners at the annual meeting), and takes
any other actions necessary in connection with the operation and management of
the managed separate accounts.
The Travelers Investment Management Company ("TIMCO") is a registered investment
adviser that has provided investment advisory services since its incorporation
in 1967. Its principal offices are located at One Tower Square, Hartford,
Connecticut, and it is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc., which is a wholly owned subsidiary of Citigroup Inc., a bank
services holding company. TIMCO provides investment management and advisory
services to Accounts TAS, TGIS and TSB. The fees are as follows:
<TABLE>
<CAPTION>
ACCOUNT ANNUAL MANAGEMENT FEE
------- ---------------------
<S> <C>
Account TAS.......................... 0.35% of average daily net assets
Account TGIS......................... 0.3233% of average daily net assets
Account TSB.......................... 0.3233% of average daily net assets
</TABLE>
Travelers Asset Management International Company LLC ("TAMIC") is a registered
investment adviser that has provided investment advisory services since its
incorporation in 1978. Its principal
16
<PAGE> 17
offices are located at One Tower Square, Hartford, Connecticut, and it is an
indirect wholly owned subsidiary of Citigroup Inc., a bank holding company.
TAMIC provides investment and management and advisory services to Accounts GIS,
QB, MM and TB.
<TABLE>
<CAPTION>
ACCOUNT ANNUAL MANAGEMENT FEE
------- ---------------------
<S> <C>
0.65% of the first $500,000,000,
Account GIS.......................... plus
0.55% of the next $500,000,000, plus
0.50% of the next $500,000,000, plus
0.45% of the next $500,000,000, plus
0.40% of amounts over $2,000,000,000
(of Account GIS's aggregate net
asset value)
Account TB........................... 0.50% of the first $50,000,000, plus
0.40% of the next $100,000,000, plus
0.30% of the next $100,000,000, plus
0.25% of amounts over $250,000,000
(of Account TB's aggregate net
asset value)
Account QB........................... 0.3233% of average daily net assets
Account MM........................... 0.3233% of average daily net assets
</TABLE>
TAMIC also supervises the subadvisor of Account GIS, TIMCO. According to the
terms of this written subadvisory agreement, TAMIC will pay TIMCO a fee
equivalent on an annual basis to the following:
<TABLE>
<CAPTION>
AGGREGATE
ANNUAL NET ASSET
SUBADVISORY VALUE OF
FEE THE ACCOUNT
- ----------- -----------
<C> <S> <C>
0.45 % of the first $ 700,000,000plus
0.275% of the next $ 300,000,000plus
0.25 % of the next $ 500,000,000plus
0.225% of the next $ 500,000,000plus
0.20 % of amounts over $2,000,000,000
</TABLE>
TIMCO also acts as investment adviser or subadviser for:
- other investment companies used to fund variable products
- individual and pooled pension and profit-sharing accounts
- affiliated companies of The Travelers Insurance Company.
TAMIC also acts as investment adviser or subadviser for:
- other investment companies used to fund variable products
- individual and pooled pension and profit-sharing accounts and domestic
insurance companies affiliated with The Travelers Insurance Company
- nonaffiliated insurance companies.
TRANSFERS
- --------------------------------------------------------------------------------
Up to 30 days before the maturity date, you may transfer all or part of the
contract value between funding options. Transfers are made at the value(s) next
determined after we receive your request at the Home Office. There are no
charges or restrictions on the amount or frequency of transfers currently;
however, we reserve the right to charge a fee for any transfer request, and to
limit the number of transfers to one in any six-month period. We also reserve
the right to restrict transfers by any market timing firm or any other third
party authorized to initiate transfers on behalf of multiple contract owners. We
may, among other things, not accept: 1) the transfer instructions of any agent
acting under a power of attorney on behalf of more than one owner, or 2) the
transfer
17
<PAGE> 18
or exchange instructions of individual owners who have executed pre-authorized
transfer forms which are submitted by market timing firms or other third parties
on behalf of more than one owner. We further reserve the right to limit
transfers that we determine will disadvantage other contract owners.
Since different funding options have different expenses, a transfer of contract
values from one funding option to another could result in your investment
becoming subject to higher or lower expenses. After the maturity date, you may
make transfers between funding options only with our consent. Please refer to
Appendix B for information about transfers between the Fixed Account and the
funding options.
DOLLAR COST AVERAGING
Dollar cost averaging or the pre-authorized transfer program (the "DCA Program")
allows you to transfer a set dollar amount to other funding options on a monthly
or quarterly basis during the accumulation phase of the Contract. Using this
method, more accumulation units are purchased in a funding option if the value
per unit is low and fewer accumulation units are purchased if the value per unit
is high. Therefore, a lower-than-average cost per unit may be achieved over the
long run.
You may elect the DCA Program through written request or other method acceptable
to the Company. Certain minimums may apply to enroll in the program and to
amounts transferred.
You may establish pre-authorized transfers of contract values from the Fixed
Account, subject to certain restrictions. Under the DCA Program, automated
transfers from the Fixed Account may not deplete your Fixed Account Value in
less than twelve months from your enrollment in the DCA Program.
In addition to the DCA Program, Travelers may credit increased interest rates to
contract owners under an administrative Special DCA Program established at the
discretion of Travelers, depending on availability and state law. Under this
program, the contract owner may pre-authorize level transfers to any of the
funding options under either a 6 Month Program or 12 Month Program. The 6 Month
Program and the 12 Month Program will generally have different credited interest
rates. Under the 6 Month Program, the interest rate can accrue up to 6 months on
funds in the Special DCA Program and all purchase payments and accrued interest
must be transferred on a level basis to the selected funding option in 6 months.
Under the 12 Month Program, the interest rate can accrue up to 12 months on
funds in the Special DCA Program and all purchase payments and accrued interest
in this Program must be transferred on a level basis to the selected funding
options in 12 months.
The pre-authorized transfers will begin after the initial Program purchase
payment and complete enrollment instructions are received by Travelers. If
complete Program enrollment instructions are not received by the Company within
15 days of receipt of the initial Program purchase payment, the entire balance
in the Program will be credited with the non-Program interest rate then in
effect for the Fixed Account.
You may start or stop participation in the DCA Program at any time, but you must
give the Company at least 30 days' notice to change any automated transfer
instructions that are currently in place. If you stop the Special DCA Program
and elect to remain in the Fixed Account, your contract value will be credited
for the remainder of 6 or 12 months with the interest rate for non-Program
funds.
A contract owner may only have one DCA Program or Special DCA Program in place
at one time. Any subsequent purchase payments received by the Company within the
Program period selected will be allocated to the current funding options over
the remainder of that Program transfer period, unless otherwise directed by the
contract owner.
All provisions and terms of the Contract apply to the DCA and Special DCA
Programs, including provisions relating to the transfer of money between
investment options. We reserve the right to suspend or modify transfer
privileges at any time and to assess a processing fee for this service.
18
<PAGE> 19
ASSET ALLOCATION ADVICE
You may elect to enter into a separate advisory agreement with Copeland, an
affiliate of the Company. For a fee, Copeland provides asset allocation advice
under its CHART Program(R), which is fully described in a separate Disclosure
Statement. The CHART program may not be available in all marketing programs
through which this Contract is sold.
TACTICAL ASSET ALLOCATION SERVICES
- --------------------------------------------------------------------------------
Accounts TGIS, TSB and TAS ("Market Timed Accounts") are funding options
available to individuals who have entered into tactical asset allocation
services agreements ("Tactical Asset Allocation agreements") with registered
investment advisers who provide tactical asset allocation services ("registered
investment advisers"). These agreements allow the registered investment advisers
to act on your behalf by transferring all or a portion of your cash value units
from one Market Timed Account to another. The registered investment advisers can
transfer funds only from one Market Timed Account to another Market Timed
Account.
You may transfer account values from any of the Market Timed Accounts to any of
the other funding options. However, if you are in a Market Timed Account,
transfer all current account values and direct all future allocations to a
non-timed funding option, the Tactical Asset Allocation agreements with the
registered investment advisers automatically terminate. If this occurs, the
registered investment advisers no longer have the right to transfer funds on
your behalf. Partial withdrawals from the Market Timed Accounts do not affect
the tactical asset allocation agreements.
Copeland, a registered investment adviser and an affiliate of the Company,
provides Tactical Asset Allocation services for a fee. The fee equals 1.25%
annually of the current value of the assets subject to the program. Copeland
also charges a $30 program application fee. If you terminate your Tactical Asset
Allocation agreement and decide to reenter an agreement, the Tactical Asset
Allocation fees will be reassessed, and a new $30 application fee will be
charged by Copeland.
We deduct the tactical asset allocation fee from the assets of the Market Timed
Accounts. Although the Tactical Asset Allocation agreements are between you and
Copeland, we are solely responsible for payment of the fee to Copeland. On each
Valuation Date, we deduct the amount necessary to pay the fee from each Market
Timed Account and, in turn, pay that amount to Copeland. This is the only
payment method available to those who enter into Tactical Asset Allocation
agreements. Individuals in the Market Timed Accounts may use unaffiliated market
timing investment advisers with our approval and if such advisers agree to an
arrangement substantially identical to the asset charge payment method.
Because the tactical asset allocation services are provided according to
individual agreements between you and the registered investment advisers, the
Boards of Managers of the Market Timed Accounts do not exercise any supervisory
or oversight role for services or the related fees.
Under the asset charge payment method, the daily deductions for market timing
fees are not treated by the Company as taxable distributions. (See "Federal Tax
Considerations".)
TACTICAL ASSET ALLOCATION RISKS
If you invest in the Market Timed Accounts without a tactical asset allocation
agreement, you may bear a higher proportion of the expenses associated with
Separate Account portfolio turnover. In addition, those who allocate amounts to
these Accounts without a Tactical Asset Allocation agreement will still have the
Tactical Asset Allocation fees deducted on a daily basis. We intend to identify
any such individuals and restore to their accounts, no less frequently than
monthly, an amount equal to the deductions for the Tactical Asset Allocation
fees. However, this restored amount will not reflect any investment experience
of the fees deducted.
19
<PAGE> 20
If you participate in a Tactical Asset Allocation agreement, you may be subject
to the following additional risks: (1) higher transaction costs; (2) higher
portfolio turnover rate; (3) investment return goals not being achieved by the
registered investment advisers which provide Tactical Asset Allocation services;
and (4) higher account expenses for depleting and, then starting up the account.
Actions by the registered investment advisers which provide tactical asset
allocation services may also increase risks generally found in any investment,
i.e., the failure to achieve an investment objective, and possible lower yield.
In addition, if more than one Tactical Asset Allocation strategy uses a Market
Timed Account, those who invest in the Market Timed Account when others are
transferred into or out of that Account by the registered investment advisers
may bear part of the direct costs incurred by those individuals who were
transferred. For example, if 90% of a Market Timed Account is under one tactical
asset allocation strategy, and those funds are transferred into or out of that
Account, those constituting the other 10% of the Market Timed Account may bear a
higher portion of the expense for the transfer.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Under a group Contract, before a participant's maturity date, we will pay all or
any portion of that participant's cash surrender value, that is, the contract
value less any withdrawal charge and any premium tax not previously deducted to
the owner or participant, as provided in the plan. A group contract owner's
account may be surrendered for cash without the consent of any participant, as
provided in the plan.
Under an individual Contract, the contract owner may redeem all or any portion
of the cash surrender value any time before the maturity date. Unless you submit
a written request specifying the fixed or variable funding option(s) from which
amounts are to be withdrawn, the withdrawal will be made on a pro rata basis.
The cash surrender value will be determined as of the business day after we
receive the surrender request at our Home Office. The cash surrender value may
be more or less than the purchase payments made. Withdrawals during the annuity
period are not allowed.
We may defer payment of any cash surrender value for a period of up to seven
days after the written request is received, but it is our intent to pay as soon
as possible. We cannot process requests for withdrawal that are not in good
order. We will contact you if there is a deficiency causing a delay and will
advise what is needed to act upon the withdrawal request.
For those participating in the Texas Optional Retirement Program, withdrawals
may only be made upon termination of employment, retirement or death as provided
in the Texas Optional Retirement Program.
Participants in Section 403(b) tax deferred annuity plans may not withdraw
certain salary reduction amounts before reaching age 59 1/2, unless withdrawn
due to separation from service, death, disability or hardship. (See "Federal Tax
Considerations.")
SYSTEMATIC WITHDRAWALS
Each contract year, you may elect to take monthly, quarterly, semiannual or
annual systematic withdrawals of a specified dollar amount. Any applicable
premium taxes will be deducted. To elect this option, an election form provided
by the Company must be completed. Systematic withdrawals may be stopped at any
time, provided the Company receives at least 30 days' written notice.
We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where permitted by law).
Each systematic withdrawal is subject to federal income tax on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under
20
<PAGE> 21
age 59 1/2. You should consult with your tax adviser regarding the tax
consequences of systematic withdrawal.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
Contract Owner (you). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive all
benefits given in the contract provided you have not named an irrevocable
beneficiary and provided the Contract is not assigned.
You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.
Joint Owner. For nonqualified contracts only, joint owners (e.g. spouses) may
be named in a written request before the contract is in effect. Joint owners may
independently exercise transfers allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them.
BENEFICIARY
You name the beneficiary in a written request. The beneficiary has the right to
receive any death benefit proceeds upon the death of the annuitant or a contract
owner. If more than one beneficiary survives the annuitant or contract owner,
they will share equally in benefits unless different shares are recorded with
the Company by written request before the death of the annuitant or contract
owner. In the case of a non-spousal beneficiary or a spousal beneficiary who has
chosen not to assume the contract, the death benefit proceeds will be held in a
fixed account until the beneficiary elects a Settlement Option or takes a
distribution.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.
ANNUITANT
The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.
A contingent annuitant may not be changed, deleted or added after the Contract
becomes effective.
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<PAGE> 22
DEATH BENEFIT
- --------------------------------------------------------------------------------
DEATH PROCEEDS BEFORE THE MATURITY DATE
The following death benefit applies to all Contracts that include a death
benefit. We calculate the death benefit amount as of the date our Home Office
receives proof of death. All amounts will be reduced by any outstanding loans
and any premium taxes due.
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------
INDIVIDUAL CONTRACT GROUP CONTRACT
- ------------------------------------------------------------------------------------------------------
IF ANNUITANT DIES ON OR AFTER AGE 75, AND BEFORE THE IF PARTICIPANT DIES ON OR AFTER AGE 75, AND
MATURITY DATE: BEFORE THE MATURITY DATE:
- ------------------------------------------------------------------------------------------------------
Amount paid: the cash value of the Contract Amount paid: the participant's interest
under the Contract
- ------------------------------------------------------------------------------------------------------
IF ANNUITANT DIES BEFORE AGE 75, AND BEFORE THE IF PARTICIPANT DIES BEFORE AGE 75, AND
MATURITY DATE: BEFORE THE MATURITY DATE:
- ------------------------------------------------------------------------------------------------------
Amount paid: the greater of (1),(2) or (3) below: Amount paid: the greatest of (1), (2) or (3)
below:
- ------------------------------------------------------------------------------------------------------
(1) the cash value (1) the participant's interest
- ------------------------------------------------------------------------------------------------------
(2) the total purchase payments made, less any prior (2) the total purchase payments made on
withdrawals or loans behalf of the participant, less any
prior withdrawals or loans
- ------------------------------------------------------------------------------------------------------
(3) the cash value on the 5(th) multiple contract (3) the participant's interest on the 5(th)
year anniversary (i.e., 5(th), 10(th), 15(th), multiple certificate year anniversary
etc.) less any withdrawals made since that (i.e., 5(th), 10(th), 15(th), etc.) less
anniversary before we receive proof of death any withdrawals made since that
anniversary before we receive proof of
death.
- ------------------------------------------------------------------------------------------------------
</TABLE>
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds before the maturity date under
various situations for nonqualified contracts and qualified contracts is
summarized in the charts below. The charts do not encompass every situation and
are merely intended as a general guide. More detailed information is provided in
your Contract. Generally, the person(s) receiving the benefit may request that
the proceeds be paid in a lump sum, or be applied to one of the settlement
options available under the Contract.
NONQUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Owner (who is not the The beneficiary (ies), Unless, the beneficiary is Yes
annuitant) (with no joint or if none, to the the contract owner's spouse
owner) contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Owner (who is the annuitant) The beneficiary (ies), Unless, the beneficiary is Yes
(with no joint owner) or if none, to the the contract owner's spouse
contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Joint Owner (who is not the The surviving joint Unless the surviving joint Yes
annuitant) owner. owner is the spouse and
elects to assume and continue
the contract.
- --------------------------------------------------------------------------------------------------------------
Joint Owner (who is the The beneficiary (ies), Unless the beneficiary is the Yes
annuitant) or if none, to the contract owner's spouse and
contract owner's estate. the spouse elects to assume
and continue the contract.
Or, unless there is a
contingent annuitant the
contingent annuitant becomes
the annuitant and the
proceeds will be paid to the
surviving joint owner. If the
surviving joint owner is the
spouse, the spouse may elect
to assume and continue the
contract.
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is not the The beneficiary (ies). Unless, there is a contingent No
contract owner) annuitant. Then, the
contingent annuitant becomes
the annuitant and the
Contract continues in effect
(generally using the original
maturity date). The proceeds
will then be paid upon the
death of the contingent
annuitant or owner.
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is the contract See death of "owner who N/A
owner) is the annuitant" above.
- --------------------------------------------------------------------------------------------------------------
Annuitant (where owner is a The beneficiary (ies) Yes (Death of
nonnatural person/trust) (e.g. the trust). annuitant is
treated as death
of the owner in
these
circumstances.)
- --------------------------------------------------------------------------------------------------------------
Contingent Annuitant (assuming No death proceeds are N/A
annuitant is still alive) payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Certain payout rules of the Internal Revenue Code (IRC) are triggered upon the
death of any Owner. Non-spousal Beneficiaries (as well as spousal
beneficiaries who choose not to assume the contract) must begin taking
distributions based on the Beneficiary's life expectancy within one year of
death or take a complete distribution of contract proceeds within 5 years of
death.
23
<PAGE> 24
QUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY (SEE *
ABOVE)
- --------------------------------------------------------------------------------------------------------------
Owner/Annuitant The beneficiary (ies), Yes
or if none, >to the
contract owner's estate.
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
DEATH PROCEEDS AFTER THE MATURITY DATE
If any owner or the annuitant dies on or after the maturity date, the Company
will pay the beneficiary a death benefit consisting of any benefit remaining
under the annuity or income option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Under the Contract, you can receive scheduled annuity payments. You can choose
the month and the year in which those payments begin (maturity date). You can
also choose among payout plans (annuity or income options). While the annuitant
is alive, you can change your selection any time up to the maturity date.
Annuity payments will begin on the maturity date stated in the Contract/
Certificate unless it has been fully surrendered or the proceeds have been paid
to the beneficiary before that date. Annuity payments are a series of periodic
payments (a) for life; (b) for life with either a minimum number of payments or
a specific amount assured; or (c) for the joint lifetime of the annuitant and
another person, and thereafter during the lifetime of the survivor. Income
options that are not based on any lifetime are also available. We may require
proof that the annuitant is alive before annuity payments are made. Not all
options may be available in all states.
You may choose to annuitize at any time after you purchase the Contract. Under
nonqualified Contracts, unless you elect otherwise, the maturity date will be
the annuitant's 75th birthday or ten years after the effective date of the
Contract, if later. Under qualified Contracts, the maturity date must be before
the individual's 70th birthday, unless we consent to a later date.
At least 30 days before the original maturity date, you may extend the maturity
date to any time prior to the annuitant's 85th birthday or to a later date with
our consent. Certain annuity options taken at the maturity date may be used to
meet the minimum required distribution requirements of federal tax law, or a
program of partial surrenders may be used instead. These mandatory distribution
requirements take effect generally upon the death of the contract owner, or with
qualified Contracts upon either the later of the contract owner's attainment of
age 70 1/2 or year of retirement; or the death of the contract owner. You should
seek independent tax advice regarding the election of minimum required
distributions.
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. If, at the time annuity payments begin,
no election has been made to the contrary, the contract value will be applied to
provide an annuity funded by the same investment options as you have selected
during the accumulation period. At least 30 days before the maturity
24
<PAGE> 25
date, you may transfer the contract value among the funding options in order to
change the basis on which annuity payments will be determined. (See
"Transfers.")
VARIABLE ANNUITY
You may choose an annuity payout that fluctuates depending on the investment
experience of the variable funding options. The number of annuity units credited
to the Contract is determined by dividing the first monthly annuity payment
attributable to each funding option by the corresponding accumulation unit value
as of 14 days before the date annuity payments begin. An annuity unit is used to
measure the dollar value of an annuity payment. The number of annuity units (but
not their value) remains fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. If a variable annuity is elected,
the amount applied to it will be the value of the funding options as of 14 days
before the date annuity payments begin less any applicable premium taxes not
previously deducted.
The amount of the first monthly payment depends on the annuity option elected
and the annuitant's adjusted age. A formula for determining the adjusted age is
contained in the Contract. The total first monthly annuity payment is determined
by multiplying the benefit per $1,000 of value shown in the Contract tables by
the number of thousands of dollars of contract value applied to that annuity
option and factors in an assumed daily net investment factor. The Assumed Daily
Net Investment factor corresponds to an annual interest rate of 3%, used to
determine the guaranteed payout rates shown. If investment rates are higher at
the time annuitization is selected, payout rates will be higher than those
shown. The Company reserves the right to require satisfactory proof of age of
any person on whose life annuity payments are based before making the first
payment under any of the payment options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
all subsequent annuity payments changes from month to month based on the
investment experience of the applicable funding options. The total amount of
each annuity payment will be equal to the sum of the basic payments in each
funding option. The actual amounts of these payments are determined by
multiplying the number of annuity units credited to each funding option by the
corresponding annuity unit value as of the date 14 days before the date the
payment is due.
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity," except that the amount
applied to begin the annuity will be the contract value, determined as of the
date annuity payments begin. Payout rates will not be lower than those shown in
the Contract. If it would produce a larger payment, the first fixed annuity
payment will be determined using the Life Annuity Tables in effect on the
maturity date.
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
On the maturity date, we will pay the amount due under the Contract in one lump
sum, or in accordance with the payment option selected by the contract owner.
Election of an annuity option or an income option must be made in writing in a
form satisfactory to the Company. Any election made during the lifetime of the
group Contract participant, or the annuitant under an individual Contract, must
be made by the participant, as provided in the plan or the contract owner, as
applicable. The terms of options elected may be restricted to meet the contract
qualification requirements of Section 401(a)(9) of the Internal Revenue Code.
Income options differ from annuity options in that the amount of the payments
made under income options are unrelated to the length of life of any person.
Thus, the participant may outlive
25
<PAGE> 26
the payment period. Although the Company continues to deduct the charge for
mortality and expense risks, it assumes no mortality risks for amounts applied
under any income option.
The minimum amount that can be placed under an annuity option or income option,
is $2,000 unless we agree to a lesser amount. If any monthly periodic payment
due is less than $20, we reserve the right to make payments at less frequent
intervals. Annuity options and income options may be elected on a monthly,
quarterly, semiannual or annual basis.
AUTOMATIC OPTION -- Unless we are directed otherwise by the owner, if the
participant is living and has a spouse and no election has been made, the
Company will, on that participant's maturity date, pay to the participant the
first of a series of annuity payments based on the life of the participant as
the primary payee and the participant's spouse in accordance with Option 5
below.
Unless the plan provides otherwise, if the participant has no spouse, the
Company will, on the maturity date, pay to the participant the first of a series
of annuity payments based on the life of the participant, in accordance with
Option 2 with 120 monthly payments assured.
ANNUITY OPTIONS
OPTION 1 -- LIFE ANNUITY -- NO REFUND: The Company will make annuity payments
during the lifetime of the person on whose life the payments are based,
terminating with the last payment preceding death. While this option offers the
maximum periodic payment, there is no assurance of a minimum number of payments,
nor is there a provision for a death benefit for beneficiaries.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED: The
Company will make monthly annuity payments during the lifetime of the person on
whose life payments are based, with the agreement that if, at the death of that
person, payments have been made for less than 120, 180 or 240 months, as
selected, payments will be continued during the remainder of the period to the
beneficiary designated. The beneficiary may instead receive a single sum
settlement equal to the discounted value of the future payments with the
interest rate equivalent to the assumption originally used when the annuity
began.
OPTION 3 -- UNIT REFUND LIFE ANNUITY: The Company will make annuity payments
during the lifetime of the person on whose life payments are based, terminating
with the last payment due before the death of that person, provided that, at
death, the beneficiary will receive in one sum the current dollar value of the
number of annuity units equal to (a) minus (b) (if that difference is positive)
where: (a) is the total amount applied under the option divided by the annuity
unit value on the due date of the first annuity payment, and (b) is the product
of the number of the annuity units represented by each payment and the number of
payments made.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: The Company will
make annuity payments during the joint lifetime of the two persons on whose
lives payments are based, and during the lifetime of the survivor. No further
payments will be made following the death of the survivor. There is no assurance
of a minimum number of payments, nor is there a provision for a death benefit
upon the survivor's death.
OPTION 5 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCES ON DEATH OF
PRIMARY PAYEE: The Company will make annuity payments during the lifetime of the
two persons on whose lives payments are based. One of the two persons will be
designated as the primary payee. The other will be designated as the secondary
payee. On the death of the secondary payee, if survived by the primary payee,
the Company will continue to make monthly annuity payments to the primary payee
in the same amount that would have been payable during the joint lifetime of the
two persons. On the death of the primary payee, if survived by the secondary
payee, the Company will continue to make annuity payments to the secondary payee
in an amount equal to 50% of the payments which would have been made during the
lifetime of the primary payee. No further payments will be made following the
death of the survivor.
OPTION 6 -- OTHER ANNUITY OPTIONS: The Company will make any other arrangements
for annuity payments as may be mutually agreed upon.
26
<PAGE> 27
INCOME OPTIONS
Income payments are periodic payments made by the Company which are not based on
the life of the participant.
The cash surrender value used to determine the amount of any income payment will
be calculated as of 14 days before the date an income payment is due and will be
determined on the same basis as the cash surrender value during the Accumulation
Phase, including the deduction for mortality and expense risks.
While income options do not directly involve mortality risks for the Company, an
individual may elect to apply the remaining cash surrender value to provide an
annuity at the guaranteed rates even though income payments have been received
under an income option. Before an owner or participant makes any income option
election, he or she should consult a tax adviser as to any adverse tax
consequences the election might have.
OPTION 1 -- PAYMENTS OF A FIXED AMOUNT: The Company will make equal payments of
the amount elected until the cash surrender value applied under this option has
been exhausted. The final payment will include any amount insufficient to make
another full payment.
OPTION 2 -- PAYMENTS FOR A FIXED PERIOD: The Company will make payments for the
number of years selected. The amount of each payment will be equal to the
remaining cash surrender value applied under this option divided by the number
of remaining payments.
OPTION 3 -- INVESTMENT INCOME: The Company will make payments for the period
agreed on. The amount payable will be equal to the excess, if any, of the cash
surrender value under this option over the amount applied under this option. No
payment will be made if the cash surrender value is less than the amount
applied, and it is possible that no payments would be made for a period of time.
Payments under this option are not considered to be annuity payments and are
taxable in full as ordinary income. (See "Federal Tax Considerations.") This
option will generally be inappropriate under federal tax law for periods that
exceed the participant's attainment of age 70 1/2.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
For individual contracts, you may return the Contract for a full refund of the
cash value (including charges) within ten days after you receive it (the "right
to return period"). You bear the investment risk on the purchase payment during
the right to return period; therefore, the cash value returned may be greater or
less than your purchase payment.
If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your purchase payment will
be refunded in full; during the remainder of the right to return period, the
cash value (including charges) will be refunded.
For group Contracts issued in the state of New York, during the 20 days after
receiving a certificate, the participant may return it to us, by mail or in
person, if for any reason the participant has changed his or her mind. Upon
return of the certificate, the Company will refund to the contract owner the sum
of all purchase payments made under the Contract, and will make the separate
accounts whole if the accumulation value has declined.
The cash value will be determined following the close of the business day on
which we receive the Contract and a written request for a refund. Where state
law requires a longer period, or the return of purchase payments or other
variations of this provision, the Company will comply. Refer to your Contract
for any state-specific information.
The right to return is not available to participants of the Texas Optional
Retirement Program.
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TERMINATION OF INDIVIDUAL CONTRACT
You do not need to make any purchase payments after the first to keep the
Contract in effect. However, unless otherwise specified by state law, we reserve
the right to terminate the Contract on any business day if the cash value as of
that date is less than $500 and no purchase payments have been made for at least
three years. Termination will not occur until 31 days after the Company has
mailed notice of termination to the contract owner's last known address and to
any assignee of record. If the Contract is terminated, we will pay you the cash
value less any applicable premium tax, and less any applicable administrative
charge.
TERMINATION OF GROUP CONTRACT OR ACCOUNT
TERMINATION BY OWNER -- If an owner or a participant terminates an account, in
whole or in part, while the Contract remains in effect; and the value of the
terminated account is to be either paid in cash to you or to a participant; or
transferred to any other funding vehicle, the Company will pay or transfer the
cash surrender value of the terminated account.
If this Contract is terminated, whether or not the plan is terminated; and the
owner or the participant, as provided in the plan, elect that values are not to
be paid out in cash or transferred, the Company reserves the right to agree to
apply a participant's interest either as instructed by the owner or the
participant, or under one of the options described under "Options in the Event
of Termination of a Participant."
TERMINATION BY PARTICIPANT -- If a participant terminates an individual account,
in whole or in part, while the Contract remains in effect; and the value of the
terminated individual account is to be either paid in cash to the participant,
or transferred to any other funding vehicle, the Company will pay or transfer
the cash surrender value of the terminated account.
TERMINATION BY THE COMPANY AND TERMINATION AMOUNT -- If the cash value in a
participant's individual account is less than the termination amount stated in
the Contract, and no premium has been applied to the account for at least three
years, the Company reserves the right to terminate that account, and to move the
cash value of that participant's individual account to the owner's account.
If the plan does not allow for this movement to the owner's account, the cash
value, less any applicable premium tax not previously deducted, will be paid to
that participant or to the owner, as provided in the plan.
We reserve the right to terminate this Contract on any valuation date if:
1. there is no cash value in any participant's individual account, and
2. the cash value of the owner's account, if any, is less than $500, and
3. the premium has not been paid for at least three years.
If this Contract is terminated, the cash value of the owner's account, if any,
less any applicable premium tax not previously deducted will be paid to you.
Termination will not occur until 31 days after the Company has mailed notice of
termination to the group contract owner or the participant, as provided in the
plan, at the last known address; and to any assignee of record.
OPTIONS IN THE EVENT OF TERMINATION OF A PARTICIPANT -- In the event that,
before a participant's maturity date, that participant terminates participation
in the plan, the owner or that participant, as provided in the plan, with
respect to that participant's interest may elect:
1. If that participant is at least 50 years of age, to have that
participant's interest applied to provide an annuity option or an income
option.
2. If the Contract is continued, to have that participant's interest
applied to continue as a paid-up deferred annuity for that participant,
(i.e., the cash value remains in the Contract and the annuity becomes
payable under the same terms and conditions as the annuity that would
have otherwise been payable at the maturity date).
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3. To have the owner or that participant, as provided in the plan, receive
that participant's interest in cash.
4. If that participant becomes a participant under another group contract
of this same type which is in effect with us, to transfer that
participant's interest to that group contract.
5. To make any other arrangements as may be mutually agreed on.
If this Contract is continued, any cash value to which a terminating participant
is not entitled under the plan, will be moved to the owner's account.
AUTOMATIC BENEFIT -- In the event of termination, unless otherwise provided in
the Plan, a participant's interest will continue as a paid-up deferred annuity
in accordance with option 2. above, if this Contract is continued. Or, if this
Contract is terminated, will be paid in cash to the owner or to that
participant, as provided in the plan.
ANNUITY PAYMENTS -- Termination of this Contract or the plan will not affect
payments being made under any annuity option which began before the date of
termination.
DISTRIBUTION FROM ONE ACCOUNT TO ANOTHER ACCOUNT
Under a group Contract, the owner may, as provided for in the plan, distribute
the cash value from the owner's account to one or more individual accounts. No
distribution will be allowed between individual accounts.
The owner may, as required by and provided for in the plan, move the cash value
from any or all individual accounts to the owner's account without a charge.
REQUIRED REPORTS
As often as required by law, but at least once in each contract year before the
due date of the first annuity payment, we will furnish a report showing the
number of accumulation units credited to the Contract and the corresponding
accumulation unit value(s) as of the report date for each funding option to
which the contract owner has allocated amounts during the applicable period. The
Company will keep all records required under federal and state laws.
CHANGE OF CONTRACT
For group Contracts, the Company may, at any time, make any changes, including
retroactive changes, in the Contract to the extent that the change is required
to meet the requirements of any federal law or regulation to which the Company
is subject.
Except as provided in the paragraph immediately above, no change may be made in
the Contract before the fifth anniversary of the contract date, and in no event
will changes be made with respect to payments being made by the Company under
any annuity option which has commenced prior to the date of change. On and after
the fifth anniversary of the contract date, the Company reserves the right to
change the termination amount (see "Termination of Contract or Account"), the
calculation of the net investment rate and the unit values, and the annuity
tables. Any change in the annuity tables will be applicable only to premiums
received under the Contract after the change. The ability to make such change
lessens the value of mortality and expense guarantees. Other changes (including
changes to the administrative charge) may be applicable to all owners' accounts
and individual accounts under the Contract, to only the owners' accounts and
individual accounts established after the change, or to only premiums received
under the Contract after the date of change as the Company declares at the time
of change. The Company will give notice to the owner at least 90 days before the
date the change is to take effect.
ASSIGNMENT
The participant may not assign his or her rights under a group Contract. The
owner may assign his or her rights under an individual or a group Contract if
allowed by the plan.
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SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment or
determination of values on any business day (1) when the New York Stock Exchange
("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3)
when an emergency exists as determined by the SEC so that the sale of securities
held in the Separate Account may not reasonably occur or so that the Company may
not reasonably determine the value the Separate Account's net assets; or (4)
during any other period when the SEC, by order, so permits for the protection of
security holders.
OTHER INFORMATION
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THE INSURANCE COMPANY
The Travelers Insurance Company is a stock insurance company chartered in 1864
in Connecticut and continuously engaged in the insurance business since that
time. It is licensed to conduct life insurance business in all states of the
United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British
Virgin Islands and the Bahamas. The Company is an indirect wholly owned
subsidiary of Citigroup Inc. The Company's Home Office is located at One Tower
Square, Hartford, Connecticut 06183.
FINANCIAL STATEMENTS
The financial statements for the insurance company and for the separate accounts
are located in the Statement of Additional Information.
IMSA
The Company is a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and IMSA membership in its
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities. IMSA members have adopted policies and
procedures that demonstrate a commitment to honesty, fairness and integrity in
all customer contacts involving the sale and service of individual life
insurance and annuity products.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. Any sales
representative or employee who sells the Contracts will be qualified to sell
variable annuities under applicable federal and state laws. Each broker-dealer
is registered with the SEC under the Securities Exchange Act of 1934, and all
are members of the NASD. The principal underwriter of the Contracts is CFBDS,
Inc., 21 Milk St., Boston, MA. CFBDS, Inc. is not affiliated with the Company or
the Separate Account. However, it is currently anticipated that Travelers
Distribution LLC, an affiliated broker-dealer, may become the principal
underwriter for the Contracts during the year 2000.
Up-front compensation paid to sales representatives will not exceed 7% of the
purchase payments made under the Contracts. If asset based compensation is paid,
it will not exceed 2% of the average account value annually. From time to time,
the Company may pay or permit other promotional incentives, in cash, credit or
other compensation.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered.
Where a state has not approved a contract feature or funding option, it will not
be available in that state. Any paid-up annuity, contract value or death
benefits that are available under the Contract are not less than the minimum
benefits required by the statutes of the state in which the Contract is
delivered. We reserve the right to make any changes, including retroactive
changes, in the Contract to the extent
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that the change is required to meet the requirements of any law or regulation
issued by any governmental agency to which the Company, the Contract or the
contract owner is subject.
VOTING RIGHTS
The contract owner or participant, as applicable, has certain voting rights in
the funding options. The number of votes which an owner or participant, as
provided in the plan, may cast in the accumulation period is equal to the number
of accumulation units credited to the account under the Contract. During the
annuity period, the group participant or the individual contract owner may cast
the number of votes equal to (i) the reserve related to the Contract divided by
(ii) the value of an accumulation unit. During the annuity period, the voting
rights of a participant or, under an individual Contract, an annuitant, will
decline as the reserve for the Contract declines.
Upon the death of the person authorized to vote under the Contract, all voting
rights will vest in the beneficiary of the Contract, except in the case of
nonqualified individual Contracts, where the surviving spouse may succeed to the
ownership.
FUND U. In accordance with its view of present applicable law, the Company will
vote shares of the underlying funds at regular and special meetings of the
shareholders of the funds in accordance with instructions received from persons
having a voting interest in Fund U. The Company will vote shares for which it
has not received instructions in the same proportion as it votes shares for
which it has received instructions. However, if the 1940 Act or any regulation
thereunder should be amended, or if the present interpretation thereof should
change, and as a result the Company determines that it is permitted to vote
shares of the mutual funds in its own right, it may elect to do so.
The number of shares which a person has a right to vote will be determined as of
the date concurrent with the date established by the respective mutual fund for
determining shareholders eligible to vote at the meeting of the fund, and voting
instructions will be solicited by written communication before the meeting in
accordance with the procedures established by the mutual fund.
Each person having a voting interest in Fund U will receive periodic reports
relating to the fund(s) in which he or she has an interest, proxy material and a
form with which to give such instructions with respect to the proportion of the
fund shares held in Fund U corresponding to his or her interest in Fund U.
ACCOUNTS GIS, QB, MM, TGIS, TSB, TAS AND TB. Contract owners participating in
Accounts GIS, QB, MM, TGIS, TSB, TAS or TB will be entitled to vote at their
meetings on (i) any change in the fundamental investment policies of or other
policies related to the accounts requiring the owners' approval; (ii) amendment
of the investment advisory agreements; (iii) election of the members of the
Board of Managers of the accounts; (iv) ratification of the selection of an
independent public accountant for the accounts; (v) any other matters which, in
the future, under the 1940 Act require the owners' approval; and (vi) any other
business which may properly come before the meeting. The number of votes which
each contract owner or a participant may cast, including fractional votes, shall
be determined as of the date to be chosen by the Board of Managers within 75
days of the date of the meeting, and at least 20 days' written notice of the
meeting will be given.
Votes for which participants under a group Contract are entitled to instruct the
owner, but for which the owner has received no instructions, will be cast by the
owner for or against each proposal to be voted on only in the same proportion as
votes for which instructions have been received.
LEGAL PROCEEDINGS AND OPINIONS
Legal matters in connection with the federal laws and regulations affecting the
issue and sale of the contract described in this prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable
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annuity contracts under Connecticut law, have been passed on by the General
Counsel of the Companies.
There are no pending legal proceedings affecting the Separate Account. There is
one material pending legal proceeding, other than ordinary routine litigation
incidental to business, to which the Company is a party.
In March 1997, a purported class action entitled Patterman v. The Travelers,
Inc., et al. was commenced in the Superior Court of Richmond County, Georgia,
alleging, among other things, violations of the Georgia RICO statute and other
state laws by an affiliate of the Company, Primerica Financial Services, Inc.
and certain of its affiliates. Plaintiffs seek unspecified compensatory and
punitive damages and other relief. In October 1997, defendants answered the
complaint, denied liability and asserted numerous affirmative defenses. In
February 1998, on defendants' motion, the Superior Court of Richmond County
transferred the lawsuit to the Superior Court of Gwinnett County, Georgia.
Plaintiffs appealed the transfer order, and in December 1998 the Court of
Appeals of the State of Georgia reversed the lower court's decision. Defendants
petitioned the Georgia Supreme Court to hear an appeal from the decision of the
Court of Appeals, and the petition was granted in May 1998. In September 1999,
oral argument on defendants' petition was heard and, on February 28, 2000, the
Georgia Supreme Court affirmed the Georgia County Appeals and remanded the
matter to the Superior Court of Richmond County. In March 2000, defendants moved
the Georgia Supreme Court to reconsider its February 28, 2000 decision, and that
motion remains pending. Proceedings in the trial court have been stayed pending
appeal. Defendants intend to vigorously contest the litigation.
THE SEPARATE ACCOUNTS
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THE SEPARATE ACCOUNTS
Two different types of separate accounts are available to Fund the Contracts
described in this prospectus. The first type, Fund U, is a unit investment trust
registered with the SEC under the 1940 Act. Fund U's assets are invested
exclusively in the shares of the underlying funds.
The second type of separate account available under the Contract, the "managed
separate accounts," (Accounts GIS, QB, MM, TGIS, TSB, TAS and TB) are
diversified, open-end management investment companies registered with the SEC
under the 1940 Act. The assets of the managed separate accounts are invested
directly in securities such as stocks, bonds or money market instruments which
are compatible with the stated investment policies of each separate account.
Each of the separate accounts available in connection with the Contract has
different investment objectives and fundamental investment policies.
The separate accounts were established on the following dates: Fund U -- May 16,
1983; Account GIS -- September 22, 1967; Account QB -- July 29, 1974; Account
MM -- December 29, 1981; Accounts TGIS and TSB -- October 30, 1986; and Accounts
TAS and TB -- January 2, 1987.
Under Connecticut law, the assets of the separate accounts will be held for the
exclusive benefit of its owners. Income, gains and losses, whether or not
realized, for assets allocated to the separate accounts, are in accordance with
the applicable annuity contracts, credited to or charged against the separate
accounts without regard to other income, gains or losses of the Company. The
assets in the separate accounts are not chargeable with liabilities arising out
of any other business which the Company may conduct. The obligations arising
under the variable annuity contracts are obligations of the Company.
For each managed separate account, neither the investment objective nor the
fundamental investment restrictions, as described in the SAI, can be changed
without a vote of the majority of the outstanding voting securities of the
Accounts, as defined by the 1940 Act.
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PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of historical
performance for the funding options of Fund U. The Company may also advertise
the standardized average annual total returns of Accounts GIS, QB, MM, TGIS,
TSB, TAS, TB and Fund U, calculated in a manner prescribed by the SEC, as well
as the nonstandardized total returns, as described below.
STANDARDIZED METHOD. Quotations of average annual total returns are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the funding option, and then related to ending redeemable values over
one-, five-, and ten-year periods, or for a period covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the annual
administrative charge is converted to a percentage of assets based on the actual
fee collected, divided by the average net assets for Contracts sold. Each
quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. Nonstandardized total returns will not reflect the
deduction of the annual contract administrative charge, which, if reflected,
would decrease the level of performance shown. The withdrawal charge is not
reflected because the Contract is designed for long-term investment.
For funding options that were in existence before they became available under
the Separate Account, the nonstandardized average annual total returns will
reflect the investment performance that such funding options would have achieved
(reduced by the applicable charges) had they been held under the Contract for
the period quoted. The total return quotations are based upon historical
earnings and are not necessarily representative of future performance.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000, and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of the Separate Account and the variable funding
options.
FEDERAL TAX CONSIDERATIONS
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The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.
GENERAL TAXATION OF ANNUITIES
Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (Code) governs how this money is ultimately taxed,
depending upon the type of contract, qualified or non-qualified, and the manner
in which the money is distributed, as briefly described below.
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TAX-FREE EXCHANGES. The Internal Revenue Code provides that, generally, no gain
or loss is recognized when an annuity contract is received in exchange for a
life, endowment, or annuity contract. Since different annuity contracts have
different expenses, fees and benefits, a tax-free exchange could result in your
investment becoming subject to higher or lower fees and/or expenses.
TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED
If you purchase an annuity contract with proceeds of an eligible rollover
distribution from any pension plan, specially sponsored program, or individual
retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a
qualified contract. Some examples of qualified contracts are: IRAs, 403(b)
annuities, pension and profit-sharing plans (including 401(k) plans), Keogh
Plans, and certain other qualified deferred compensation plans. If you purchase
the contract on an individual basis with after-tax dollars and not under one of
the programs described above, your contract is referred to as nonqualified.
NONQUALIFIED ANNUITY CONTRACTS
As the owner of a nonqualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on purchase payments, but you will not be
taxed on increases in the value of your contract until a distribution
occurs -- either as a withdrawal (distribution made prior to the maturity date),
or as annuity payments. When a withdrawal is made, you are taxed on the amount
of the withdrawal that is considered earnings. Similarly, when you receive an
annuity payment, part of each payment is considered a return of your purchase
payments and will not be taxed. The remaining portion of the annuity payment
(i.e., any earnings) will be considered ordinary income for tax purposes.
If a nonqualified annuity is owned by other than an individual, however, (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includible in income
annually. Furthermore, for contracts issued after April 22, 1987, if you
transfer the contract without adequate consideration all deferred increases in
value will be includible in your income at the time of the transfer.
If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includible in your income. (See "Penalty
Tax for Premature Distributions" below.) There is income in the contract to the
extent the contract value exceeds your investment in the contract. The
investment in the contract equals the total purchase payments you paid less any
amount received previously which was excludible from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.
Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.
QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the contract have not yet
been taxed, the full amount of all distributions, including lump-sum withdrawals
and annuity payments, are taxed at the ordinary income tax rate unless the
distribution is transferred to an eligible rollover account or contract. The
Contract is available as a vehicle for IRA rollovers and for other qualified
contracts. There are special rules which govern the taxation of qualified
contracts, including withdrawal
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restrictions, requirements for mandatory distributions, and contribution limits.
We have provided a more complete discussion in the SAI.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions, for life or life expectancy, or
unless the distribution follows the death or disability of the contract owner.
Other exceptions may be available in certain qualified plans.
DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
separate account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how separate accounts must be diversified. The Company
monitors the diversification of investments constantly and believes that its
accounts are adequately diversified. The consequence of any failure to diversify
is essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the separate accounts, also referred to as segregated asset accounts,
must be owned by the Company and not by the Contract Owner for federal income
tax purposes. Otherwise, the deferral of taxes is lost and income and gains from
the accounts would be includable annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent Contract Owners from
being considered the owner of the assets of the separate account.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum
distributions until the later of April 1st of the calendar year following the
calendar year in which they attain age 70 1/2 or the year of retirement.
Distributions must begin or be continued according to required patterns
following the death of the contract owner or annuitant of both qualified and
nonqualified annuities.
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TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an owner or
annuitant. Generally, such amounts are includible in the income of the recipient
as follows: (i) if distributed in a lump sum, they are taxed in the same manner
as a full surrender of the contract; or (ii) if distributed under a payment
option, they are taxed in the same way as annuity payments.
MANAGED SEPARATE ACCOUNTS
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As described earlier in this prospectus, there are various funding options
available to you under your Universal Annuity Contract. You may select from
several underlying funding options, which are described in detail in separate
prospectuses. In addition, you may choose to invest in one or more of the
managed separate accounts (the "Accounts") also offered through your Contract.
Detailed information regarding these Accounts such as investment objectives,
investment techniques, risk factors and management of the Accounts, is provided
below. Not all funding options or Accounts may be available to you. Please refer
to your Contract. There can be no assurance that the Accounts' investment
objectives will be achieved.
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THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT GIS)
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INVESTMENT ADVISER: TIMCO
PORTFOLIO MANAGER: Sandip Bhagat
INVESTMENT OBJECTIVE: Long-term accumulation of principal through capital
appreciation and retention of net investment income.
KEY INVESTMENTS: Common stock of large U.S. companies.
SELECTION PROCESS: Account GIS invests primarily in stocks of large U.S.
companies representing a wide range of industries. Stock selection is based on a
quantitative screening process which favors companies that achieve earnings
growth above consensus expectations, and whose stocks offer attractive relative
value. In order to achieve consistent performance, TIMCO manages Account GIS to
mirror the overall risk, sector weightings and growth value style
characteristics of the Standard & Poor's 500 Stock Index ("S&P 500"). The S&P
500 is a value-weighted equity index comprised mainly of large-company stocks.
ADDITIONAL INVESTMENTS, INVESTMENT STRATEGIES AND TECHNIQUES: Account GIS, to a
lesser extent, will invest in other securities. A complete description of all
investments, and their associated risks, is contained in the SAI. These
additional investments include, but are not limited to, the following:
- fixed-income securities such as bonds and notes, including U.S.
Government securities;
- exchange-traded stock index futures
- covered call options, put options
- foreign securities
For a complete list of all investments available to Account GIS, please refer to
the "Investments at a Glance" table at the end of this section and in the SAI.
PRINCIPAL RISK FACTORS: Account GIS is most subject to equities risk. For a
complete discussion of equities risk and other risks carried by the investments
of Account GIS, please refer to the "Investments, Practices and Risks" section
of this prospectus. Please see the SAI for a detailed description of all
investments, and their associated risks, available to Account GIS.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account GIS permit it to:
1. invest up to 5% of its assets in the securities of any one issuer
(exclusive of securities issued or guaranteed by the United States
government, its agencies or instrumentalities;
2. borrow from banks in amounts of up to 5% of its assets, but only for
emergency purposes;
3. purchase interests in real estate represented by securities for which
there is an established market;
4. make loans through the acquisition of a portion of a privately placed
issue of bonds, debentures or other evidences of indebtedness of a type
customarily purchased by institutional investors;
5. acquire up to 10% of the voting securities of any one issuer (it is the
present practice of Account GIS not to exceed 5% of the voting
securities of any one issuer);
6. make purchases on margin in the form of short-term credits which are
necessary for the clearance of transactions; and place up to 5% of its
net asset value in total margin deposits for positions in futures
contracts; and
7. invest up to 5% of its assets in restricted securities (securities which
may not be publicly offered without registration under the Securities
Act of 1933).
37
<PAGE> 38
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT QB)
- --------------------------------------------------------------------------------
INVESTMENT ADVISER: TAMIC
PORTFOLIO MANAGER: F. Denney Voss
INVESTMENT OBJECTIVE: Current income, moderate capital volatility and total
return.
KEY INVESTMENTS: Investment grade debt securities and money market instruments.
SELECTION PROCESS: The adviser expects that the Fund's investments generally
will maintain an average duration of 5 years or less. Investment in longer term
obligations may be made if the manager decides that the investment yields
justify a longer term commitment. No more than 25% of the value of the Account's
total assets will be invested in any one industry. The portfolio will be
actively managed and, under certain market conditions, investments may be sold
prior to maturity.
ADDITIONAL INVESTMENTS, INVESTMENT STRATEGIES AND TECHNIQUES: Account QB may
invest in many types of fixed-income securities and employ various types of
strategies. A complete description of all investments, and their associated
risks, is contained in the SAI. These additional investments include, but are
not limited to, the following:
- treasury bills
- repurchase agreements
- commercial paper
- certificates of deposit
- banker's acceptances
- bonds, notes, debentures
- convertible securities
- when-issued securities
- interest rate future contracts
For a complete list of all investments available to Account QB, please refer to
the "Investments at a Glance" table at the end of this section and in the SAI.
PRINCIPAL RISK FACTORS: Account QB is most subject to fixed-income securities
risk. For a complete discussion of fixed-income securities risk and other risks
carried by the investments of Account QB, please refer to the "Investments,
Practices and Risks" section of this prospectus.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account QB permit it to:
1. invest up to 15% of the value of its assets in the securities of any one
issuer (exclusive of obligations of the United States government and its
instrumentalities, for which there is no limit);
2. borrow from banks in amounts of up to 5% of its assets, but only for
emergency purposes;
3. purchase interests in real estate represented by securities for which
there is an established market;
4. make loans through the acquisition of a portion of a privately placed
issue of bonds, debentures or other evidences of indebtedness of a type
customarily purchased by institutional investors;
5. acquire up to 10% of the voting securities of any one issuer (it is the
present practice of Account QB not to exceed 5% of the voting securities
of any one issuer); and
6. make purchases on margin in the form of short-term credits which are
necessary for the clearance of transactions; and place up to 5% of its
net asset value in total margin deposits for positions in futures
contracts.
38
<PAGE> 39
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT MM)
- --------------------------------------------------------------------------------
INVESTMENT ADVISER: TAMIC
PORTFOLIO MANAGER: Emil J. Molinaro, Jr.
INVESTMENT OBJECTIVE: Preservation of capital, a high degree of liquidity and
high current income.
KEY INVESTMENTS: Money market instruments.
SELECTION PROCESS: The Account is a "money market" Account that invests in high
quality U.S. dollar denominated money market instruments. High quality
instruments generally are rated in the highest rating category by national
rating agencies or are deemed comparable. Eligible securities must have a
remaining maturity of 13 months or less (subject to certain exceptions). The
Account's manager selects from the following or other similar investments, as
described in the "Investments at a Glance" table at the end of this section and
in the SAI.
COMMERCIAL PAPER AND
SHORT-TERM CORPORATE DEBT Commercial paper is short-term unsecured
promissory notes issued by corporations to
finance their short-term credit needs. Commercial
paper is usually sold at a discount and is issued
with a maturity of not more than 9 months.
Short-term corporate debt that the Fund may
purchase includes notes and bonds issued by
corporations to finance longer-term credit needs.
These debt securities are issued with maturities
of more than 9 months. The Account may purchase
short-term corporate debt with a remaining
maturity of 397 days or less at the time of
purchase.
U.S. GOVERNMENT MONEY MARKET
SECURITIES These are short-term debt instruments issued or
guaranteed by the U.S. Government or its
agencies, instrumentalities or
government-sponsored enterprises. The full faith
and credit of the United States does not back all
U.S. Government securities. For example,
securities issued by Fannie Mae are supported by
that agency's right to borrow from the U.S.
Treasury under certain circumstances. Other U.S.
government securities, such as those issued by
the Federal Farm Credit Banks Funding
Corporation, are supported only by the credit of
the entity that issued them.
CREDIT AND LIQUIDITY
ENHANCEMENTS Enhancements include letters of credit,
guarantees, puts and demand features, and
insurance provided by domestic or foreign
entities such as banks and other financial
institutions. Credit and liquidity enhancements
are designed to enhance the credit quality of an
instrument to eligible security status. However,
they expose the Fund to the credit risk of the
entity providing the credit or liquidity
enhancement. Changes in the credit quality of the
provider could affect the value of the security
and the Fund's share price.
PUT FEATURES Entitle the holder to put or sell a security back
to the issuer or another party who issued the
put. Demand features, standby commitments, and
tender options are types of put features. In
exchange for getting the put, the Fund may accept
a lower rate of interest. The Fund evaluates the
credit quality of the put provider as well as the
issuer, if a different party. The put provider's
creditworthiness affects the credit quality of
the investment.
39
<PAGE> 40
VARIABLE AND FLOATING RATE
SECURITIES Have interest rates that adjust periodically,
which may be either at specific intervals or
whenever an external benchmark rate changes.
Interest-rate adjustments are designed to help
maintain a stable price for the security.
REPURCHASE AGREEMENTS These agreements permit the Account to buy a
security at one price and, at the same time,
agree to sell it back at a higher price. Delays
or losses to the Account could result if the
other party to the agreement defaults or becomes
insolvent.
RISK FACTORS
Corporate debt securities held by the Account may be subject to several types of
investment risk, including market or interest-rate risk. This risk relates to
the change in market value caused by fluctuations in prevailing interest rates
and credit risk, which, in turn, relates to the ability of the issuer to make
timely interest payments and to repay the principal at maturity. Short-term
corporate debt is less subject to market or interest-rate risk than longer-term
corporate debt. Certain corporate debt securities may be subject to call or
income risk. This risk appears during periods of falling interest rates and
involves the possibility that securities with high interest rates will be
prepaid or "called" by the issuer prior to maturity.
Because interest rates on money market instruments fluctuate in response to
economic factors, rates on the Account's short-term investments and the daily
dividends paid to its shareholders will vary, rising or falling with short-term
interest rates generally. Yields from short-term securities may be lower than
yields from longer-term securities. Also, the value of the Account's securities
generally varies inversely with interest rates, the amount of outstanding debt
and other factors. This means that the value of the Account's investments
usually increases as short-term interest rates fall and decreases as short-term
interest rates rise.
Account investments may be unprofitable in a time of sustained high inflation.
In addition, the Account's investments in certificates of deposit issued by U.S.
branches of foreign banks and foreign branches of U.S. banks involve somewhat
more risk, but also more potential reward, than investments in comparable
domestic obligations.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account MM permit it to:
1. invest up to 25% of its assets in the securities of issuers in any
single industry (exclusive of securities issued by domestic banks and
savings and loan associations, or securities issued or guaranteed by the
United States government, its agencies, authorities or
instrumentalities); neither all finance companies, as a group, nor all
utility companies, as a group, are considered a single industry for the
purpose of this restriction;
2. invest up to 5% of its assets in the securities of any one issuer, other
than securities issued or guaranteed by the United States Government.
However, Account MM may invest up to 25% of its total assets in first
tier securities, as defined in Rule 2a-7, of a single issuer for a
period of up to three business days after the purchase thereof;
3. acquire up to 10% of the outstanding securities of any one issuer
(exclusive of securities issued or guaranteed by the United States
government, its agencies or instrumentalities);
4. borrow money from banks on a temporary basis in an aggregate amount not
to exceed one third of Account MM's assets (including the amount
borrowed); and
5. pledge, hypothecate or transfer, as security for indebtedness, any
securities owned or held by Account MM as may be necessary in connection
with any borrowing mentioned above and in an aggregate amount of up to
5% of Account MM's assets.
40
<PAGE> 41
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT TGIS)
- --------------------------------------------------------------------------------
INVESTMENT ADVISER: TIMCO
PORTFOLIO MANAGERS: Sandip Bhagat
INVESTMENT OBJECTIVE: Long-term accumulation of principal through capital
appreciation and retention of net investment income.
KEY INVESTMENTS: Common stock of large U.S. companies.
SELECTION PROCESS: Account TGIS invests primarily in stocks of large U.S.
companies representing a wide range of industries, while maintaining a highly
marketable portfolio in order to accommodate cash flows associated with
market-timing moves. Stock selection is based on a quantitative screening
process which favors companies that achieve earnings growth above consensus
expectations, and whose stocks offer attractive relative value. In order to
achieve consistent performance, TIMCO manages Account TGIS to mirror the overall
risk, sector weightings and growth value style characteristics of the Standard &
Poor's 500 Stock Index ("S&P 500"). The S&P 500 is a value-weighted equity index
comprised mainly of large-company stocks.
ADDITIONAL INVESTMENTS, INVESTMENT STRATEGIES AND TECHNIQUES: Account TGIS will
also use exchange-traded financial futures contracts to facilitate market-timed
moves, and as a hedge to protect against changes in stock prices or interest
rates. Account TGIS, to a lesser extent, may invest in other securities. These
additional investments include, but are not limited to, the following:
- fixed-income securities such as bonds and notes;
- including U.S. Government securities
- covered call options, put options
- foreign securities
For a complete list of all investments available to Account TGIS, please refer
to the "Investments at a Glance" table at the end of this section and in the
SAI.
PRINCIPAL RISK FACTORS: Account TGIS is most subject to equities risk and
market-timing risk. For a complete discussion of these and other risks carried
by the investments of Account GIS, please refer to the "Investments, Practices
and Risks" section of this prospectus. Please see the SAI for a detailed
description of all investments, and their associated risks, available to Account
TGIS.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TGIS are the same as Account GIS.
(See "Account GIS -- Fundamental Investment Policies.")
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT TSB)
- --------------------------------------------------------------------------------
INVESTMENT ADVISER: TIMCO
PORTFOLIO MANAGER: Emil Molinaro, Jr.
INVESTMENT OBJECTIVE: High current income with limited price volatility while
maintaining a high degree of liquidity.
KEY INVESTMENTS: High quality fixed-income securities.
41
<PAGE> 42
SELECTION PROCESS: The Account invests in high quality U.S. dollar denominated
instruments. High quality instruments generally are rated in the highest rating
category by national rating agencies or are deemed comparable. The weighted
average maturity of the portfolio is not expected to exceed 9 months. The
Account's manager selects from the following or other similar investments, as
described in the "Investments at a Glance" table at the end of this section and
in the SAI.
COMMERCIAL PAPER AND
SHORT-TERM CORPORATE DEBT Commercial paper is short-term unsecured
promissory notes issued by corporations to
finance their short-term credit needs. Commercial
Paper is usually sold at a discount and is issued
with a maturity of not more than 9 months.
Short-term corporate debt that the Fund may
purchase includes notes and bonds rated at least
AA with final maturities of 18 months or less at
time of purchase.
U.S. GOVERNMENT SECURITIES These are short-term debt instruments issued or
guaranteed by the U.S. Government or its
agencies, instrumentalities or
government-sponsored enterprises. The full faith
and credit of the United States does not back all
U.S. Government securities. For example,
securities issued by Fannie Mae are supported by
that agency's right to borrow from the U.S.
Treasury under certain circumstances. Other U.S.
Government securities, such as those issued by
the Federal Farm Credit Banks Funding
Corporation, are supported only by the credit of
the entity that issued them.
REPURCHASE AGREEMENTS Permit the Account to buy a security at one price
and, at the same time, agree to sell it back at a
higher price. Delays or losses to the Account
could result if the other party to the agreement
defaults or becomes insolvent.
RISK FACTORS
Corporate debt securities held by the Account may be subject to several types of
investment risk, including market or interest-rate risk. This risk relates to
the change in market value caused by fluctuations in prevailing interest rates
and credit risk, which, in turn, relates to the ability of the issuer to make
timely interest payments and to repay the principal at maturity. Short-term
corporate debt is less subject to market or interest-rate risk than longer-term
corporate debt. Certain corporate debt securities may be subject to call or
income risk. This risk appears during periods of falling interest rates and
involves the possibility that securities with high interest rates will be
prepaid or "called" by the issuer prior to maturity.
Because interest rates on money market instruments fluctuate in response to
economic factors, rates on the Account's short-term investments and the daily
dividends paid to its shareholders will vary, rising or falling with short-term
interest rates generally. Yields from short-term securities may be lower than
yields from longer-term securities. Also, the value of the Account's securities
generally varies inversely with interest rates, the amount of outstanding debt
and other factors. This means that the value of the Account's investments
usually increases as short-term interest rates fall and decreases as short-term
interest rates rise.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TSB permit it to:
1. invest up to 25% of its assets in the securities of issuers in any
single industry (exclusive of securities issued by domestic banks and
savings and loan associations, or securities issued or guaranteed by the
United States government, its agencies, authorities or
instrumentalities); neither all finance companies, as a group, nor all
utility companies, as a group, are considered a single industry for the
purpose of this restriction;
42
<PAGE> 43
2. invest up to 10% of its assets in the securities of any one issuer,
including repurchase agreements with any one bank or dealer (exclusive
of securities issued or guaranteed by the United States government, its
agencies or instrumentalities);
3. acquire up to 10% of the outstanding securities of any one issuer
(exclusive of securities issued or guaranteed by the United States
government, its agencies or instrumentalities);
4. borrow money from banks on a temporary basis in an aggregate amount not
to exceed one third of Account TSB's assets (including the amount
borrowed); and
5. pledge, hypothecate or transfer, as security for indebtedness, any
securities owned or held by Account TSB as may be necessary in
connection with any borrowing mentioned above and in an aggregate amount
of up to 5% of Account TSB's assets.
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT TAS)
- --------------------------------------------------------------------------------
INVESTMENT ADVISER: TIMCO
PORTFOLIO MANAGER: Sandip Bhagat
INVESTMENT OBJECTIVE: Growth of capital.
KEY INVESTMENTS: Common stock of mid-size U.S. companies.
SELECTION PROCESS: In selecting investments for the portfolio, TIMCO identifies
stocks which appear to be undervalued. A computer model reviews over one
thousand stocks using fundamental and technical criteria such as price relative
to book value, earnings growth and momentum, and the change in price relative to
a broad composite stock index.
Computer-aided analysis may also be used to match certain characteristics of the
portfolio, such as industry sector representation, to the characteristics of a
market index, or to impose a tilt toward certain attributes. Account TAS
currently focuses on mid-sized domestic companies with market capitalizations
that fall between $500 million and $10 billion.
ADDITIONAL INVESTMENTS, INVESTMENT STRATEGIES AND TECHNIQUES: Account TAS may
invest in smaller or larger companies without limitation. A complete description
of all investments, and their associated risks, is contained in the SAI. These
additional investments include, but are not limited to, the following:
<TABLE>
<S> <C>
- - convertible securities - illiquid securities
- - rights and warrants - money market instruments
- - foreign securities - call or put options
</TABLE>
In addition, Account TAS will use exchange-traded futures contracts to
facilitate market-timed moves. For a complete list of all investments available
to Account TAS, please refer to the "Investments at a Glance" table at the end
of this section and in the SAI.
PRINCIPAL RISK FACTORS: Account TAS is most subject to equities risk, including
smaller companies risk, and market-timing risk. For a complete discussion of
these types of risk as well as other risks carried by the investments of Account
TAS, please refer to the "Investments, Practices and Risks" Section of this
prospectus. Please see the SAI for a detailed description of all investments,
and their associated risks, available to Account TAS.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TAS permit it to:
1. invest up to 5% of its assets in the securities of any one issuer;
2. borrow money from banks in amounts of up to 10% of its assets, but only
as a temporary measure for emergency or extraordinary purposes;
43
<PAGE> 44
3. pledge up to 10% of its assets to secure borrowings;
4. invest up to 25% of its assets in the securities of issuers in the same
industry; and
5. invest up to 10% of its assets in repurchase agreements maturing in more
than seven days and securities for which market quotations are not
readily available.
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES
(ACCOUNT TB)
- --------------------------------------------------------------------------------
NOTE: The Travelers Timed Bond Account is not currently available to new
contract owners.
INVESTMENT ADVISER: TAMIC
PORTFOLIO MANAGER: Richard John
INVESTMENT OBJECTIVE: Current income and total return.
KEY INVESTMENTS: Highest credit quality debt securities.
SELECTION PROCESS: Account TB invests primarily in direct or indirect
obligations of the United States and its instrumentalities, and in obligations
of independent Federal Agencies. These debt securities include, but are not
limited to Treasury Bills, Treasury Notes and Treasury Bonds. Some examples of
the U.S. instrumentalities, enterprises or agencies in whose Securities the
Account may invest are:
<TABLE>
<S> <C>
- - Government National Mortgage Association - Farm Credit System
- - Small Business Administration - Federal Home Loan Mortgage Corporation
- - Federal Housing Association - Student Loan Marketing Association
- - Export -- Import Bank of the U.S.
</TABLE>
For a complete list of all investments available to Account TB, please refer to
the "Investments at a Glance" at the end of this section and in the SAI.
ADDITIONAL INVESTMENTS, INVESTMENT STRATEGIES AND TECHNIQUES: In addition,
Account TB may use exchange-traded futures contracts to facilitate market timed
moves, and as a hedge to protect against changes in interest rates. A complete
description of all investments and associated risks is contained in the SAI.
These additional investments include, but are not limited to :
- money market investments
- when-issued securities
- covered call options
PRINCIPAL RISK FACTORS: Account TB is most subject to fixed-income securities
risk and market timing risk. For a complete discussion of these and other risks
carried by the investments of Account TB, please refer to the "Investments,
Practices and Risks" section of this prospectus. Please see the SAI for a
detailed description of all investments, and their associated risks, available
to Account TB.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TB permit it to:
1. invest up to 5% of its assets in the securities of any one issuer
(exclusive of securities of the United States government, its agencies
or instrumentalities, for which there is no limit);
2. borrow money from banks in amounts of up to 10% of its assets, but only
as a temporary measure for emergency or extraordinary purposes;
3. pledge up to 10% of its assets to secure borrowings;
44
<PAGE> 45
4. invest up to 25% of its assets in the securities of issuers in the same
industry (exclusive of securities of the U.S. government, its agencies
or instrumentalities, for which there is no limit); and
5. invest up to 10% of its assets in repurchase agreements maturing in more
than seven days.
INVESTMENTS, PRACTICES AND RISKS OF THE
MANAGED SEPARATE ACCOUNTS
- --------------------------------------------------------------------------------
Each Account invests in various instruments subject to its particular investment
policy. The Accounts invest in some or all of the following, as indicated below
and in the Statement of Additional Information. For a free copy of the Statement
of Additional Information, see the front cover of this prospectus.
EQUITIES
(GIS, QB, TAS, TGIS) Equity securities include common and preferred
stock, warrants, rights, depository receipts and
shares, trust certificates, and real estate
instruments.
Equities are subject to market risk. Many factors
affect the stock market prices and dividend
payouts of equity investments. These factors
include general business conditions, investor
confidence in the economy, and current conditions
in a particular industry or company. Each company
determines whether or not to pay dividends on
common stock. Equity securities are subject to
financial risks relating to the issuer's earning
stability and overall financial soundness.
Smaller and emerging growth companies are
particularly sensitive to these factors.
Equity securities that are traded
over-the-counter may be more volatile than
exchange-listed stocks, and the Fund may
experience difficulty in purchasing or selling
these securities at a fair price.
When you sell your shares, they may be worth more
or less than what you paid for them.
FIXED INCOME INVESTMENTS
(All Accounts) Each Account may invest in fixed income
securities. Fixed income securities include U.S.
government securities, certificates of deposit,
and short-term money market instruments. Fixed
income securities may have all types of interest
rate payment and reset terms, including fixed
rate, adjustable rate, zero coupon, contingent,
deferred, payment in kind and auction rate
features.
The value of debt securities varies inversely
with interest rates. This means generally that
the value of these investments increases as
short-term interest rates fall and decreases as
short-term interest rates rise. Yields from
short-term securities normally may be lower than
yields from longer-term securities. A bond's
price is affected by its issuer's credit quality.
An issuer may not always make payments on a fixed
income security. Some fixed income securities,
such as mortgage-backed securities are subject to
prepayment risk, which occurs when an issuer can
prepay the principal owed on a security before
its maturity.
High-yield, high-risk securities, commonly called
"junk bonds," are considered speculative. While
generally providing
45
<PAGE> 46
greater income than investments in higher-quality
securities, these securities will involve greater
risk of principal and income (including the
possibility of default or bankruptcy of the
issuers of the security).
TACTICAL ASSET ALLOCATION
RISKS
(TAS, TGIS, TG, TSB) If you participate in a tactical asset allocation
agreement, you may be subject to the following
additional risks: (1) higher transaction costs;
(2) higher portfolio turnover rate; (3)
investment return goals not being achieved by the
registered investment advisers which provide
tactical asset allocation services; and (4)
higher account expenses for depleting and, then
starting up the account. Actions by the
registered investment advisers which provide
tactical asset allocation services may also
increase risks generally found in any investment,
i.e., the failure to achieve an investment
objective, and possible lower yield. In addition,
if more than one tactical asset allocation
strategy uses a Market Timed Account, those who
invest in the Market Timed Account when others
are transferred into or out of that Account by
the registered investment advisers may bear part
of the direct costs incurred by those individuals
who were transferred. For example, if 90% of a
Market Timed Account is under one tactical asset
allocation strategy, and those funds are
transferred into or out of that Account, those
constituting the other 10% of the Market Timed
Account may bear a higher portion of the expense
for the transfer.
FOREIGN SECURITIES
(GIS, QB, TAS, TGIS) An investment in foreign securities involves risk
in addition to those of U.S. securities,
including possible political and economic
instability and the possible imposition of
exchange controls or other restrictions on
investments. The Account also bears an
"information" risk associated with the different
accounting, auditing, and financial reporting
standards in many foreign countries. If an
Account invests in securities denominated or
quoted in currencies other than the U.S. dollar,
changes in foreign currency rates relative to the
U.S. dollar will affect the U.S. dollar value of
the Account's assets.
DERIVATIVES AND HEDGING
TECHNIQUES
(GIS, QB, TAS, TGIS, TB) An Account may use derivative contracts, such as
futures and options on securities, for any of the
following purposes:
- To hedge against the economic impact of adverse
changes in the market value of its securities,
due to changes in stock market prices, currency
exchange rates or interest rates;
- As a substitute for buying or selling
securities
- To enhance return
Even a small investment in derivative contracts
can have a big impact on an Account's stock
market, currency and interest rate exposure.
Therefore, using derivatives can
disproportionately increase losses and reduce
opportunities for gain when stock prices,
currency rates or interest rates are changing.
For a more complete description of derivative and
hedging techniques and their associated risks,
please refer to the Statement of Additional
Information.
46
<PAGE> 47
OTHER RISK FACTORS
SELECTION RISK
(GIS, QB, TAS, TGIS) Account investors are subject to selection risk
in that a strategy used, or stock selected, may
fail to have the desired effect. Specifically,
stocks believed to show potential for capital
growth may not achieve that growth. Strategies or
instruments used to hedge against a possible risk
or loss may fail to protect against the
particular risk or loss.
TEMPORARY DEFENSIVE POSITIONS
(All Accounts) The Accounts may depart from principal investment
strategies in response to adverse market,
economic or political conditions by taking
temporary defensive positions in various types of
money market and short-term debt securities. If
an Account takes a temporary defensive position,
it is not pursuing its investment goal.
47
<PAGE> 48
INVESTMENTS AT A GLANCE
- --------------------------------------------------------------------------------
Each Account invests in various instruments subject to its particular investment
policies. The Accounts invest in some or all of the following, as indicated
below. These techniques and practices are described together with their risks,
in the SAI.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES GIS MM QB TAS TGIS TSB TB
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Affiliated Bank Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
American Depositary Receipts X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Asset-Backed Mortgage Securities X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Bankers Acceptances X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Buying Put and Call Options X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Certificates of Deposit X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Commercial Paper X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Convertible Securities X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Corporate Asset-Backed Securities X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Debt Securities X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Emerging Market Securities
- ---------------------------------------------------------------------------------------------------------------------------------
Equity Securities X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Floating & Variable Rate Instruments X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Foreign Securities X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Forward Contracts on Foreign Currency
- ---------------------------------------------------------------------------------------------------------------------------------
Futures Contracts X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Illiquid Securities X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Indexed Securities X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Index Futures Contracts X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Company Securities
- ---------------------------------------------------------------------------------------------------------------------------------
Investment in Unseasoned Companies X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Lending Portfolio Securities
- ---------------------------------------------------------------------------------------------------------------------------------
Letters of Credit X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Loan Participations
- ---------------------------------------------------------------------------------------------------------------------------------
Money Market Instruments X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Options on Foreign Currencies
- ---------------------------------------------------------------------------------------------------------------------------------
Options on Index Futures Contracts X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Options on Stock Indices X X
- ---------------------------------------------------------------------------------------------------------------------------------
Other Direct Indebtedness X X
- ---------------------------------------------------------------------------------------------------------------------------------
Real Estate-Related Instruments X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Reverse Repurchase Agreements X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Short Sales "Against the Box"
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term Money Market Instruments X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Swap Agreements
- ---------------------------------------------------------------------------------------------------------------------------------
Temporary Bank Borrowing X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Variable Amount Master Demand Notes X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
When-Issued and Delayed Delivery Securities X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Writing Covered Call Options X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE> 49
APPENDIX
A
CONDENSED FINANCIAL INFORMATION
- -------------------------------------------------------------------------
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
1999 1998 1997 1996
------------------- ------------------- ----------------- -----------------
Q NQ Q NQ Q NQ Q NQ
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year... $ 6.033 $ 6.257 $ 3.779 $ 3.920 $ 3.034 $3.146 $ 2.396 $2.485
Unit Value at end of year......... 9.148 9.487 6.033 6.257 3.779 3.920 3.034 3.146
Number of units outstanding at end
of year (thousands)............. 131,075 11,805 104,732 11,574 84,250 9,791 64,294 7,828
HIGH YIELD BOND TRUST
Unit Value at beginning of year... $ 3.432 $ 3.468 $ 3.261 $ 3.295 $ 2.833 $2.863 $ 2.472 $2.498
Unit Value at end of year......... 3.539 3.576 3.432 3.468 3.261 3.295 2.833 2.863
Number of units outstanding at end
of year (thousands)............. 6,319 898 6,959 1,011 6,673 973 5,312 657
MANAGED ASSETS TRUST
Unit Value at beginning of year... $ 4.462 $ 4.802 $ 3.720 $ 4.004 $ 3.105 $3.342 $ 2.763 $2.975
Unit Value at end of year......... 5.033 5.417 4.462 4.802 3.720 4.004 3.105 3.342
Number of units outstanding at end
of year (thousands)............. 54,963 6,248 53,900 5,958 53,841 5,164 55,055 4,632
<CAPTION>
1995
-----------------
Q NQ
- ----------------------------------- -----------------
<S> <C> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year... $ 1.779 $1.845
Unit Value at end of year......... 2.396 2.485
Number of units outstanding at end
of year (thousands)............. 45,979 4,415
HIGH YIELD BOND TRUST
Unit Value at beginning of year... $ 2.167 $2.189
Unit Value at end of year......... 2.472 2.498
Number of units outstanding at end
of year (thousands)............. 4,592 498
MANAGED ASSETS TRUST
Unit Value at beginning of year... $ 2.201 $2.369
Unit Value at end of year......... 2.763 2.975
Number of units outstanding at end
of year (thousands)............. 57,020 4,114
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----------------- ----------------- ----------------- ----------------- -------
Q NQ Q NQ Q NQ Q NQ Q
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year... $ 1.892 $1.962 $ 1.665 $1.727 $ 1.433 $1.487 $ 1.075 $1.114 $ 1.157
Unit Value at end of year......... 1.779 1.845 1.892 1.962 1.665 1.727 1.433 1.487 1.075
Number of units outstanding at end
of year (thousands)............. 40,160 3,605 30,003 2,825 16,453 1,020 12,703 887 11,356
HIGH YIELD BOND TRUST
Unit Value at beginning of year... $ 2.222 $2.245 $ 1.974 $1.994 $ 1.767 $1.785 $ 1.418 $1.433 $ 1.573
Unit Value at end of year......... 2.167 2.189 2.222 2.245 1.976 1.994 1.767 1.785 1.418
Number of units outstanding at end
of year (thousands)............. 4,708 585 5,066 603 4,730 428 4,018 344 4,045
MANAGED ASSETS TRUST
Unit Value at beginning of year... $ 2.281 $2.455 $ 2.111 $2.273 $ 2.034 $2.189 $ 1.691 $1.821 $ 1.671
Unit Value at end of year......... 2.201 2.369 2.281 2.455 2.111 2.273 2.034 2.189 1.691
Number of units outstanding at end
of year (thousands)............. 58,355 4,813 63,538 4,490 65,926 4,120 58,106 3,359 51,489
<CAPTION>
1990
------
NQ
- ----------------------------------- ------
<S> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year... $1.200
Unit Value at end of year......... 1.114
Number of units outstanding at end
of year (thousands)............. 553
HIGH YIELD BOND TRUST
Unit Value at beginning of year... $1.590
Unit Value at end of year......... 1.433
Number of units outstanding at end
of year (thousands)............. 341
MANAGED ASSETS TRUST
Unit Value at beginning of year... $1.799
Unit Value at end of year......... 1.821
Number of units outstanding at end
of year (thousands)............. 2,744
</TABLE>
Q = Qualified
NQ = NonQualified
The financial statements of Fund U and the consolidated financial
statements of The Travelers Insurance Company and Subsidiaries are
contained in the SAI.
* Prior to May 1, 1994, the Capital Appreciation Fund was known as the
Aggressive Stock Trust.
A-1
<PAGE> 50
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DREYFUS STOCK INDEX FUND (1/92)*
Unit Value at beginning of year......... $ 3.110 $ 2.456 $ 1.870 $ 1.546 $ 1.144 $ 1.148 $ 1.064 $ 1.000
Unit Value at end of year............... 3.704 3.110 2.456 1.870 1.546 1.144 1.148 1.064
Number of units outstanding at end of
year (thousands)...................... 168,819 147,531 109,317 66,098 43,247 31,600 26,789 12,089
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY FUND
(6/93)*
Unit Value at beginning of period....... $ 2.445 $ 2.143 $ 1.647 $ 1.354 $ .990 $ 1.012 $ 1.000 --
Unit Value at end of period............. 2.408 2.445 2.143 1.647 1.354 .990 1.012 --
Number of units outstanding at end of
period (thousands).................... 176,542 187,872 185,895 170,552 137,330 100,082 37,136 --
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND (5/93)*
Unit Value at beginning of period....... $ 1.390 $ 1.541 $ 1.460 $ 1.526 $ 1.168 $ 1.079 $ 1.000 --
Unit Value at end of period............. 1.877 1.390 1.541 1.460 1.526 1.168 1.079 --
Number of units outstanding at end of
period (thousands).................... 181,955 187,717 162,146 122,877 103,815 73,838 27,011 --
AMERICAN ODYSSEY GLOBAL HIGH-YIELD BOND FUND(1) (5/93)*
Unit Value at beginning of period....... $ 1.125 $ 1.183 $ 1.129 $ 1.102 $ 1.006 $ 1.020 $ 1.000 --
Unit Value at end of period............. 1.229 1.125 1.183 1.129 1.102 1.006 1.020 --
Number of units outstanding at end of
period (thousands).................... 70,729 70,747 48,929 44,077 24,416 17,611 8,201 --
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND FUND (6/93)*
Unit Value at beginning of period....... $ 1.317 $ 1.229 $ 1.157 $ 1.128 $ .993 $ 1.035 $ 1.000 --
Unit Value at end of period............. 1.320 1.317 1.229 1.157 1.128 .993 1.035 --
Number of units outstanding at end of
period (thousands).................... 87,217 93,456 86,914 78,211 68,878 50,403 19,564 --
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND (5/93)*
Unit Value at beginning of period....... $ 1.806 $ 1.592 $ 1.534 $ 1.274 $ 1.084 $ 1.180 $ 1.000 --
Unit Value at end of period............. 2.364 1.806 1.592 1.534 1.274 1.084 1.180 --
Number of units outstanding at end of
period (thousands).................... 147,994 161,690 143,959 121,896 70,364 47,096 16,944 --
AMERICAN ODYSSEY LONG-TERM BOND FUND (6/93)*
Unit Value at beginning of period....... $ 1.456 $ 1.352 $ 1.221 $ 1.221 $ .990 $ 1.085 $ 1.000 --
Unit Value at end of period............. 1.398 1.456 1.352 1.221 1.221 .990 1.085 --
Number of units outstanding at end of
period (thousands).................... 163,822 170,067 159,728 137,075 101,376 70,928 25,467 --
DREYFUS VARIABLE INVESTMENT FUND
SMALL CAP PORTFOLIO (5/98)*
Unit Value at beginning of period....... $ 0.860 $ 1.000 -- -- -- -- -- --
Unit Value at end of period............. 1.046 0.860 -- -- -- -- -- --
Number of units outstanding at end of
period (thousands).................... 8,737 4,815 -- -- -- -- -- --
FIDELITY'S VARIABLE INSURANCE PRODUCTS
FUND
EQUITY-INCOME PORTFOLIO -- INITIAL CLASS
(7/93)*
Unit Value at beginning of period....... $ 2.335 $ 2.118 $ 1.674 $ 1.484 $ 1.112 $ 1.052 $ 1.000 --
Unit Value at end of period............. 2.452 2.335 2.118 1.674 1.484 1.112 1.052 --
Number of units outstanding at end of
period (thousands).................... 216,708 243,964 237,050 205,636 153,463 78,856 13,414 --
GROWTH PORTFOLIO -- INITIAL CLASS
(1/92)*
Unit Value at beginning of year......... $ 3.033 $ 2.201 $ 1.805 $ 1.594 $ 1.192 $ 1.207 $ 1.024 $ 1.000
Unit Value at end of year............... 4.117 3.033 2.201 1.805 1.594 1.192 1.207 1.024
Number of units outstanding at end of
year (thousands)...................... 301,815 295,980 289,002 274,892 229,299 176,304 101,260 30,240
</TABLE>
A-2
<PAGE> 51
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
HIGH INCOME PORTFOLIO -- INITIAL CLASS
(2/92)*
Unit Value at beginning of year......... $ 1.939 $ 2.052 $ 1.766 $ 1.568 $ 1.316 $ 1.354 $ 1.138 $ 1.000
Unit Value at end of year............... 2.071 1.939 2.052 1.766 1.568 1.316 1.354 1.138
Number of units outstanding at end of
year (thousands)...................... 43,922 49,347 48,895 40,309 32,601 25,813 17,381 4,875
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (1/92)*
ASSET MANAGER PORTFOLIO
Unit Value at beginning of year......... $ 2.135 $ 1.879 $ 1.577 $ 1.394 $ 1.207 $ 1.301 $ 1.088 $ 1.000
Unit Value at end of year............... 2.343 2.135 1.879 1.577 1.394 1.207 1.301 1.088
Number of units outstanding at end of
year (thousands)...................... 193,549 226,655 240,064 249,050 270,795 282,474 162,413 30,207
TEMPLETON VARIABLE PRODUCTS SERIES FUND
TEMPLETON ASSET ALLOCATION FUND (1/92)* (CLASS 1)
Unit Value at beginning of year......... $ 2.176 $ 2.070 $ 1.815 $ 1.546 $ 1.277 $ 1.333 $ 1.070 $ 1.000
Unit Value at end of year............... 2.640 2.176 2.070 1.815 1.546 1.277 1.333 1.070
Number of units outstanding at end of
year (thousands)...................... 88,551 105,824 124,603 113,809 107,460 103,407 51,893 13,888
TEMPLETON BOND FUND (1/92)*
(CLASS 1)
Unit Value at beginning of year......... $ 1.447 $ 1.367 $ 1.351 $ 1.250 $ 1.101 $ 1.172 $ 1.065 $ 1.000
Unit Value at end of year............... 1.345 1.447 1.367 1.351 1.250 1.101 1.172 1.065
Number of units outstanding at end of
year (thousands)...................... 7,676 9,863 10,502 10,260 10,527 10,186 8,014 3,477
TEMPLETON STOCK FUND (1/92)*
(CLASS 1)
Unit Value at beginning of year......... $ 2.211 $ 2.211 $ 2.001 $ 1.655 $ 1.338 $ 1.385 $ 1.047 $ 1.000
Unit Value at end of year............... 2.819 2.211 2.211 2.001 1.655 1.338 1.385 1.047
Number of units outstanding at end of
year (thousands)...................... 144,148 164,479 180,876 154,614 122,937 101,462 43,847 10,433
TRAVELERS SERIES FUND
ALLIANCE GROWTH PORTFOLIO (2/95)*
Unit Value at beginning of period....... $ 2.664 $ 2.091 $ 1.640 $ 1.284 $ 1.000 -- -- --
Unit Value at end of period............. 3.480 2.664 2.091 1.640 1.284 -- -- --
Number of units outstanding at end of
period (thousands).................... 37,608 31,613 19,535 10,809 2,498 -- -- --
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO**
(3/95)*
Unit Value at beginning of period....... $ 1.446 $ 1.487 $ 1.402 $ 1.195 $ 1.000 -- -- --
Unit Value at end of period............. 1.403 1.446 1.487 1.402 1.195 -- -- --
Number of units outstanding at end of
period (thousands).................... 193 240 222 242 162 -- -- --
MFS TOTAL RETURN PORTFOLIO (2/95)*
Unit Value at beginning of period....... $ 1.798 $ 1.630 $ 1.362 $ 1.205 $ 1.000 -- -- --
Unit Value at end of period............. 1.822 1.798 1.630 1.362 1.205 -- -- --
Number of units outstanding at end of
period (thousands).................... 23,142 22,751 14,655 7,302 2,734 -- -- --
PUTNAM DIVERSIFIED INCOME PORTFOLIO
(3/95)*
Unit Value at beginning of period....... $ 1.275 $ 1.282 $ 1.206 $ 1.128 $ 1.000 -- -- --
Unit Value at end of period............. 1.273 1.275 1.282 1.206 1.128 -- -- --
Number of units outstanding at end of
period (thousands).................... 6,580 7,549 5,171 2,375 774 -- -- --
</TABLE>
A-3
<PAGE> 52
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO (CONTINUED)
SMITH BARNEY HIGH INCOME PORTFOLIO
(3/95)*
Unit Value at beginning of period....... $ 1.400 $ 1.412 $ 1.256 $ 1.124 $ 1.000 -- -- --
Unit Value at end of period............. 1.419 1.400 1.412 1.256 1.124 -- -- --
Number of units outstanding at end of
period (thousands).................... 2,379 2,256 1,307 553 138 -- -- --
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO (2/95)*
Unit Value at beginning of period....... $ 1.408 $ 1.339 $ 1.321 $ 1.137 $ 1.000 -- -- --
Unit Value at end of period............. 2.332 1.408 1.339 1.321 1.137 -- -- --
Number of units outstanding at end of
period (thousands).................... 11,829 8,376 7,634 5,777 593 -- -- --
SMITH BARNEY LARGE CAP VALUE PORTFOLIO
(2/95)*
(formerly Smith Barney Income and Growth Portfolio)
Unit Value at beginning of period....... $ 1.999 $ 1.843 $ 1.474 $ 1.246 $ 1.000 -- -- --
Unit Value at end of period............. 1.975 1.999 1.843 1.474 1.246 -- -- --
Number of units outstanding at end of
period (thousands).................... 13,365 13,038 10,871 6,133 1,747 -- -- --
TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK PORTFOLIO
(5/98)*
Unit Value at beginning of period....... $ 1.040 $ 1.000 -- -- -- -- -- --
Unit Value at end of period............. 1.165 1.040 -- -- -- -- -- --
Number of units outstanding at end of
period (thousands).................... 2,429 1,388 -- -- -- -- -- --
SOCIAL AWARENESS STOCK PORTFOLIO (5/92)*
Unit Value at beginning of period....... $ 2.842 $ 2.176 $ 1.731 $ 1.461 $ 1.109 $ 1.153 $ 1.086 $ 1.000
Unit Value at end of period............. 3.251 2.842 2.176 1.731 1.461 1.109 1.153 1.086
Number of units outstanding at end of
year (thousands)...................... 17,999 13,305 9,539 6,355 4,841 3,499 2,920 1,332
U.S. GOVERNMENT SECURITIES PORTFOLIO
(1/92)*
Unit Value at beginning of period....... $ 1.602 $ 1.472 $ 1.323 $ 1.321 $ 1.074 $ 1.153 $ 1.066 $ 1.000
Unit Value at end of period............. 1.517 1.602 1.472 1.323 1.321 1.074 1.153 1.066
Number of units outstanding at end of
period (thousands).................... 27,101 36,339 22,809 19,054 21,339 22,709 22,142 8,566
UTILITIES PORTFOLIO (2/94)*
Unit Value at beginning of period....... $ 1.969 $ 1.686 $ 1.363 $ 1.284 $ 1.005 $ 1.000 -- --
Unit Value at end of period............. 1.943 1.969 1.686 1.363 1.284 1.005 -- --
Number of units outstanding at end of
period (thousands).................... 15,035 16,378 12,539 13,258 11,918 5,740 -- --
</TABLE>
* Represents date money was first applied to funding option through Separate
Account.
** Not currently available to new Contract Owners in most states.
The financial statements of Fund U and the consolidated financial statements of
The Travelers Insurance Company and Subsidiaries are contained in the SAI.
"Number of units outstanding at end of period" may include units for contract
owners in the payout phase.
(1) Formerly American Odyssey Short-Term Bond Fund. The name, investment
objectives and investment subadviser were changed pursuant to a shareholder
vote effective May 1, 1998.
A-4
<PAGE> 53
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
PER UNIT DATA FOR AN ACCUMULATION AND ANNUITY UNIT OUTSTANDING THROUGHOUT EACH
YEAR
The following information for the fiscal year ended December 31, 1999 has been
audited by KPMG LLP, independent accountants, whose report thereon appears in
Account GIS's Annual Report dated December 31, 1999. The following information
for the fiscal years ended December 31, 1990 through December 31, 1998 has been
audited by other independent accountants. The information set out below should
be read in conjunction with the financial statements and related notes that also
appear in Account GIS's Annual Report, which is incorporated by reference into
the Statement of Additional Information.
<TABLE>
<CAPTION>
CONTRACTS ISSUED ON OR AFTER MAY 16, 1983 1999 1998 1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income............... $ .256 $ .234 $ .228 $ .212 $ .205 $ .189 $ .184 $ .188
Operating expenses.................... .385 .303 .228 .175 .140 .115 .106 .098
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income (loss).......... (.129) (.069) .000 .037 .065 .074 .078 .090
Unit Value at beginning of year....... 19.253 14.955 11.371 9.369 6.917 7.007 6.507 6.447
Net realized and change in unrealized
gains (losses)...................... 4.312 4.367 3.584 1.965 2.387 (.164) .422 (.030)
-------- -------- -------- -------- -------- -------- -------- --------
Unit Value at end of year............. $ 23.436 $ 19.253 $ 14.955 $ 11.371 $ 9.369 $ 6.917 $ 7.007 $ 6.507
======== ======== ======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value... $ 4.18 $ 4.30 $ 3.58 $ 2.00 $ 2.45 $ (.09) $ .50 $ .06
Ratio of operating expenses to average
net assets.......................... 1.85% 1.81% 1.70% 1.70% 1.70% 1.65% 1.57% 1.58%
Ratio of net investment income (loss) to
average net assets.................. (.62)% (.41)% .00% .36% .79% 1.05% 1.15% 1.43%
Number of units outstanding at end of
year (thousands).................... 32,648 32,051 29,545 27,578 26,688 26,692 28,497 29,661
Portfolio turnover rate............... 47% 50% 64% 85% 96% 103% 81% 189%
<CAPTION>
CONTRACTS ISSUED PRIOR TO MAY 16, 1983 1991 1990 1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income............... $ .267 $ .243 $ .233 $ .216 $ .208 $ .192 $ .189 $ .192
Operating expenses.................... .347 .272 .201 .154 .123 .100 .092 .085
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income (loss).......... (.080) (.029) .032 .062 .085 .092 .097 .107
Unit Value at beginning of year....... 20.017 15.510 11.763 9.668 7.120 7.194 6.664 6.587
Net realized and change in unrealized
gains (losses)...................... 4.490 4.536 3.715 2.033 2.463 (.166) .433 (.030)
-------- -------- -------- -------- -------- -------- -------- --------
Unit Value at end of year............. $ 24.427 $ 20.017 $ 15.510 $ 11.763 $ 9.668 $ 7.120 $ 7.194 $ 6.664
======== ======== ======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value... $ 4.41 $ 4.51 $ 3.75 $ 2.10 $ 2.55 $ (.07) $ .53 $ .08
Ratio of operating expenses to average
net assets.......................... 1.60% 1.56% 1.45% 1.45% 1.45% 1.41% 1.33% 1.33%
Ratio of net investment income (loss) to
average net assets.................. (.37)% (.16)% .24% .60% 1.02% 1.30% 1.40% 1.67%
Number of units outstanding at end of
year (thousands).................... 12,646 13,894 15,194 16,554 17,896 19,557 21,841 22,516
Portfolio turnover rate............... 47% 50% 64% 85% 96% 103% 81% 189%
<CAPTION>
<S> <C> <C>
SELECTED PER UNIT DATA
Total investment income............... $ .198 $ .192
Operating expenses.................... .091 .079
-------- --------
Net investment income (loss).......... .107 .113
Unit Value at beginning of year....... 5.048 5.295
Net realized and change in unrealized
gains (losses)...................... 1.292 (.360)
-------- --------
Unit Value at end of year............. $ 6.447 $ 5.048
======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value... $ 1.40 $ (.25)
Ratio of operating expenses to average
net assets.......................... 1.58% 1.57%
Ratio of net investment income (loss) to
average net assets.................. 1.86% 2.25%
Number of units outstanding at end of
year (thousands).................... 26,235 19,634
Portfolio turnover rate............... 319% 54%
SELECTED PER UNIT DATA
Total investment income............... $ .201 $ .199
Operating expenses.................... .077 .069
-------- --------
Net investment income (loss).......... .124 .130
Unit Value at beginning of year....... 5.145 5.383
Net realized and change in unrealized
gains (losses)...................... 1.318 (.368)
-------- --------
Unit Value at end of year............. $ 6.587 $ 5.145
======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value... $ 1.44 $ (.24)
Ratio of operating expenses to average
net assets.......................... 1.33% 1.33%
Ratio of net investment income (loss) to
average net assets.................. 2.11% 2.50%
Number of units outstanding at end of
year (thousands).................... 24,868 28,053
Portfolio turnover rate............... 319% 54%
</TABLE>
A-5
<PAGE> 54
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES
PER UNIT DATA FOR AN ACCUMULATION AND ANNUITY UNIT OUTSTANDING THROUGHOUT EACH
YEAR
The following information for the fiscal year ended December 31, 1999 has been
audited by KPMG LLP, independent accountants, whose report thereon appears in
Account QB's Annual Report dated December 31, 1999. The following information
for the fiscal years ended December 31, 1990 through December 31, 1998 has been
audited by other independent accountants. The information set out below should
be read in conjunction with the financial statements and related notes that also
appear in Account QB's Annual Report, which is incorporated by reference into
the Statement of Additional Information.
<TABLE>
<CAPTION>
CONTRACTS ISSUED PRIOR ON OR AFTER MAY 16, 1983 1999 1998 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income.................. $ .378 $ .350 $ .342 $ .368 $ .319 $ .310 $ .299
Operating expenses....................... .091 .088 .082 .078 .073 .069 .067
-------- -------- -------- -------- -------- -------- --------
Net investment income.................... .287 .262 .260 .290 .246 .241 .232
Unit Value at beginning of year.......... 5.765 5.393 5.060 4.894 4.274 4.381 4.052
Net realized and change in unrealized gains
(losses)............................... (.242) .110 .073 (.124) .374 (.348) .097
-------- -------- -------- -------- -------- -------- --------
Unit Value at end of year................ $ 5.810 $ 5.765 $ 5.393 $ 5.060 $ 4.894 $ 4.274 $ 4.381
======== ======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value.... $ .04 $ .37 $ .33 $ .17 $ .62 $ (.11) $ .33
Ratio of operating expenses to average net
assets................................. 1.57% 1.57% 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average net
assets................................. 4.97% 4.71% 5.00% 5.87% 5.29% 5.62% 5.41%
Number of units outstanding at end of year
(thousands)............................ 17,412 21,251 21,521 24,804 27,066 27,033 28,472
Portfolio turnover rate.................. 340% 438% 196% 176% 138% 27% 24%
<CAPTION>
CONTRACTS ISSUED PRIOR TO MAY 16, 1983 1992 1991 1990 1996 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income.................. $ .393 $ .363 $ .353 $ .379 $ .328 $ .318 $ .306
Operating expenses....................... .080 .076 .071 .067 .063 .059 .058
-------- -------- -------- -------- -------- -------- --------
Net investment income.................... .313 .287 .282 .312 .265 .259 .248
Unit Value at beginning of year.......... 5.994 5.593 5.234 5.050 4.400 4.498 4.150
Net realized and change in unrealized gains
(losses)............................... (.252) .114 .077 (.128) .385 (.357) .100
-------- -------- -------- -------- -------- -------- --------
Unit Value at end of year................ $ 6.055 $ 5.994 $ 5.593 $ 5.234 $ 5.050 $ 4.400 $ 4.498
======== ======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value.... $ .06 $ .40 $ .36 $ .18 $ .65 $ (.10) $ .35
Ratio of operating expenses to average net
assets................................. 1.33% 1.33% 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net
assets................................. 5.22 4.96% 5.25% 6.12% 5.54% 5.87% 5.66%
Number of units outstanding at end of year
(thousands)............................ 6,224 6,880 7,683 8,549 9,325 10,694 12,489
Portfolio turnover rate.................. 340% 438% 196% 176% 138% 27% 24%
<CAPTION>
<S> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income.................. $ .311 $ .299 $ .277
Operating expenses....................... .061 .056 .048
-------- -------- --------
Net investment income.................... .250 .243 .229
Unit Value at beginning of year.......... 3.799 3.357 3.129
Net realized and change in unrealized gains
(losses)............................... .003 .199 (.001)
-------- -------- --------
Unit Value at end of year................ $ 4.052 $ 3.799 $ 3.357
======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value.... $ .25 $ .44 $ .23
Ratio of operating expenses to average net
assets................................. 1.58% 1.57% 1.57%
Ratio of net investment income to average net
assets................................. 6.38% 6.84% 7.06%
Number of units outstanding at end of year
(thousands)............................ 20,250 17,211 14,245
Portfolio turnover rate.................. 23% 21% 41%
SELECTED PER UNIT DATA
Total investment income.................. $ .317 $ .304 $ .281
Operating expenses....................... .050 .048 .040
-------- -------- --------
Net investment income.................... .267 .256 .241
Unit Value at beginning of year.......... 3.880 3.421 3.181
Net realized and change in unrealized gains
(losses)............................... .003 .203 (.001)
-------- -------- --------
Unit Value at end of year................ $ 4.150 $ 3.880 $ 3.421
======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value.... $ .27 $ .46 $ .24
Ratio of operating expenses to average net
assets................................. 1.33% 1.33% 1.33%
Ratio of net investment income to average net
assets................................. 6.61% 7.09% 7.31%
Number of units outstanding at end of year
(thousands)............................ 13,416 14,629 16,341
Portfolio turnover rate.................. 23% 21% 41%
</TABLE>
A-6
<PAGE> 55
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES
PER UNIT DATA FOR AN ACCUMULATION AND ANNUITY UNIT OUTSTANDING THROUGHOUT EACH
YEAR
The following information for the fiscal year ended December 31, 1999 has been
audited by KPMG LLP, independent accountants, whose report thereon appears in
Account MM's Annual Report dated December 31, 1999. The following information
for the fiscal years ended December 31, 1990 through December 31, 1998 has been
audited by other independent accountants. The information set out below should
be read in conjunction with the financial statements and related notes that also
appear in Account MM's Annual Report, which is incorporated by reference into
the Statement of Additional Information.
<TABLE>
<CAPTION>
CONTRACTS ISSUED PRIOR ON OR AFTER MAY 16, 1983 1999 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income.................. $ .130 $ .133 $ .128 $ .121 $ .127 $ .087 $ .065
Operating expenses....................... .039 .038 .036 .035 .034 .032 .031
-------- -------- -------- -------- -------- -------- --------
Net investment income.................... .091 .095 .092 .086 .093 .055 .034
Unit Value at beginning of year.......... 2.450 2.355 2.263 2.177 2.084 2.029 1.995
Unit Value at end of year................ $ 2.541 $ 2.450 $ 2.355 $ 2.263 $ 2.177 $ 2.084 $ 2.029
======== ======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value............... $ .09 $ .10 $ .09 $ .09 $ .09 $ .06 $ .03
Ratio of operating expenses to average net
assets................................. 1.57% 1.57% 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average net
assets................................. 3.62% 3.95% 4.02% 3.84% 4.36% 2.72% 1.68%
Number of units outstanding at end of year
(thousands)............................ 70,545 41,570 36,134 38,044 35,721 39,675 34,227
<CAPTION>
CONTRACTS ISSUED PRIOR TO MAY 16, 1983 1992 1991 1990 1996 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income.................. $ .135 $ .138 $ .134 $ .125 $ .130 $ .091 $ .067
Operating expenses....................... .034 .033 .032 .030 .030 .028 .027
-------- -------- -------- -------- -------- -------- --------
Net investment income.................... .101 .105 .102 .095 .100 .063 .040
Unit Value at beginning of year.......... 2.548 2.443 2.341 2.246 2.146 2.083 2.043
-------- -------- -------- -------- -------- -------- --------
Unit Value at end of year................ $ 2.649 $ 2.548 $ 2.443 $ 2.341 $ 2.246 $ 2.146 $ 2.083
======== ======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value............... $ .10 $ .11 $ .10 $ .10 $ .10 $ .06 $ .04
Ratio of operating expenses to average net
assets................................. 1.33% 1.33% 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net
assets................................. 3.87% 4.20% 4.27% 4.10% 4.61% 2.98% 1.93%
Number of units outstanding at end of year
(thousands)............................ 80 91 105 112 206 206 218
<CAPTION>
<S> <C> <C> <C>
------------------------------
- ------------------------------------------------------------------------------------------
SELECTED PER UNIT DATA
Total investment income.................. $ .077 $ .118 $ .149
Operating expenses....................... .031 .030 .029
-------- -------- --------
Net investment income.................... .046 .088 .120
Unit Value at beginning of year.......... 1.949 1.861 1.741
Unit Value at end of year................ $ 1.995 $ 1.949 $ 1.861
======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value............... $ .05 $ .09 $ .12
Ratio of operating expenses to average net
assets................................. 1.57% 1.57% 1.57%
Ratio of net investment income to average net
assets................................. 2.33% 4.66% 6.68%
Number of units outstanding at end of year
(thousands)............................ 42,115 55,013 67,343
SELECTED PER UNIT DATA
Total investment income.................. $ .079 $ .120 $ .151
Operating expenses....................... .027 .026 .024
-------- -------- --------
Net investment income.................... .052 .094 .127
Unit Value at beginning of year.......... 1.991 1.897 1.770
-------- -------- --------
Unit Value at end of year................ $ 2.043 $ 1.191 $ 1.897
======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value............... $ .05 $ .09 $ .13
Ratio of operating expenses to average net
assets................................. 1.33% 1.33% 1.33%
Ratio of net investment income to average net
assets................................. 2.58% 4.90% 6.93%
Number of units outstanding at end of year
(thousands)............................ 227 262 326
</TABLE>
* On May 1, 1990, TAMIC replaced TIMCO as the investment adviser for Account MM.
A-7
<PAGE> 56
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
PER UNIT DATA FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH PERIOD
The following information for the fiscal year ended December 31, 1999 has been
audited by KPMG LLP, independent accountants, whose report thereon appears in
Account TGIS's Annual Report dated December 31, 1999. The following information
for the fiscal years ended December 1, 1990 through December 31, 1998 has been
audited by other independent accountants. The information set out below should
be read in conjunction with the financial statements and related notes that also
appear in Account TGIS's Annual Report, which is incorporated by reference into
the Statement of Additional Information.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income........... $ .076 $ .064 $ .075 $ .061 $ .083 $ .064 $ .043
Operating expenses+............... .136 .110 .090 .069 .057 .041 .042
-------- -------- -------- -------- --------- -------- -------
Net investment income (loss)...... (.060) (.046) (.015) (.008) .026 .023 .001
Unit Value at beginning of year... $ 4.468 $ 3.526 $ 2.717 $ 2.263 $ 1.695 $ 1.776 $ 1.689
Net realized and change in
unrealized gains
(losses)........................ .986 .988 .824 .462 .542 (.104) 0.086
-------- -------- -------- -------- --------- -------- -------
Unit Value at end of year......... $ 5.394 $ 4.468 $ 3,526 $ 2.717 $ 2.263 $ 1.695 $ 1.776
======== ======== ======== ======== ========= ======== =======
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .93 $ .94 $ .81 $ .45 $ .57 $ (.08) $ .09
Ratio of operating expenses to
average net assets*+............ 2.82% 2.82% 2.82% 2.82% 2.82% 2.82% 2.82%
Ratio of net investment income
(loss) to average net assets*... (1.25)% (1.16)% (.45)% (.34)% 1.37% 1.58% 0.08%
Number of units outstanding at end
of year (thousands)............. 26,010 25,192 60,312 68,111 105,044 29,692 --
Portfolio turnover rate........... 51% 81% 63% 81% 79% 19% 70%
<CAPTION>
<S> <C> <C> <C>
-------------------------------------
- ------------------------------------------------------------------------------------------------------------
SELECTED PER UNIT DATA
Total investment income........... $ .046 $ .045 $ .099
Operating expenses+............... .045 .045 .034
--------- ------- -------
Net investment income (loss)...... .001 -- .065
Unit Value at beginning of year... $ 1.643 $ 1.391 $ 1.447
Net realized and change in
unrealized gains
(losses)........................ 0.045 0.252 (.121)
--------- ------- -------
Unit Value at end of year......... $ 1.689 $ 1.643 $ 1.391
========= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .05 $ .25 $ (.06)
Ratio of operating expenses to
average net assets*+............ 2.82% 2.82% 2.41%
Ratio of net investment income
(loss) to average net assets*... 0.78% 1.33% 1.86%
Number of units outstanding at end
of year (thousands)............. 217,428 -- 5,708
Portfolio turnover rate........... 119% 489% 653%
</TABLE>
* Annualized
+ Effective May 1, 1990, market timing fees are included in operating expenses.
Prior to May 1, 1990, market timing fee payments were made by separate check
from a contract owner, and were not recorded in the financial statements of
Account TGIS, or by contractual surrender to the extent allowed under federal
tax law.
A-8
<PAGE> 57
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES*
PER UNIT DATA FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR
The following information for the fiscal year ended December 31, 1999 has been
audited by KPMG LLP, independent accountants, whose report thereon appears in
Account TSB's Annual Report dated December 31, 1999. The following information
for the fiscal years ended December 31, 1990 through December 31, 1998 has been
audited by other independent accountants. The information set out below should
be read in conjunction with the financial statements and related notes that also
appear in Account TSB's Annual Report, which is incorporated by reference into
the Statement of Additional Information.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income........... $ .076 $ .078 $ .077 $ .057 $ .074 $ .055 $ .041
Operating expenses+............... .041 .040 .039 .030 .035 .036 .037
--------- --------- -------- -------- -------- --------- ---------
Net investment income (loss)...... .035 .038 0.38 .027 .039 .019 .004
Unit Value at beginning of year... 1.437 1.399 1.361 1.333 1.292 1.275 1.271
Net realized and change in
unrealized gains (losses)**..... .001 .000 .000 .001 .002 (.002) --
--------- --------- -------- -------- -------- --------- ---------
Unit Value at end of year......... $ 1.473 $ 1.437 $ 1.399 $ 1.361 $ 1.333 $ 1.292 $ 1.275
========= ========= ======== ======== ======== ========= =========
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .04 $ .04 $ .04 $ .03 $ .04 $ .02 $ --
Ratio of operating expenses to
average net assets***+.......... 2.82% 2.82% 2.82% 2.82% 2.82% 2.82% 2.82%
Ratio of net investment income to
average net assets***........... 2.38% 2.71% 2.77% 2.47% 3.17% 1.45% .39%
Number of units outstanding at end
of year (thousands)............. 109,666 137,067 47,262 54,565 -- 216,713 353,374
<CAPTION>
<S> <C> <C> <C>
-----------------------------------
- --------------------------------------------------------------------------------------------------------------------------
SELECTED PER UNIT DATA
Total investment income........... $ .054 $ .076 $ .099
Operating expenses+............... .041 .036 .030
--------- --------- ---------
Net investment income (loss)...... .013 .040 .069
Unit Value at beginning of year... 1.258 1.218 1.149
Net realized and change in
unrealized gains (losses)**..... -- -- --
--------- --------- ---------
Unit Value at end of year......... $ 1.271 $ 1.258 $ 1.218
========= ========= =========
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .01 $ .04 $ .07
Ratio of operating expenses to
average net assets***+.......... 2.82% 2.82% 2.41%
Ratio of net investment income to
average net assets***........... 1.12% 3.07% 5.89%
Number of units outstanding at end
of year (thousands)............. 173,359 439,527 369,769
</TABLE>
+ Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner, and were not recorded in the financial
statements of Account TSB, or by contractual surrender to the extent allowed
under federal tax law.
* Prior to May 1, 1994, the Account was known as The Travelers Timed Money
Market Account for Variable Annuities.
** Effective May 2, 1994, Account TSB was authorized to invest in securities
with a maturity of greater than one year. As a result, net realized and
change in unrealized gains (losses) are no longer included in total
investment income.
*** Annualized.
A-9
<PAGE> 58
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
PER UNIT DATA FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR
The following information for the fiscal year ended December 31, 1999 has been
audited by KPMG LLP, independent accountants, whose report thereon appears in
Account TAS's Annual Report dated December 31, 1999. The following information
for the fiscal years ended December 31, 1990 through December 31, 1998 has been
audited by other independent accountants. The information set out below should
be read in conjunction with the financial statements and related notes that also
appear in Account TAS's Annual Report, which is incorporated by reference into
the Statement of Additional Information.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income........... $ .052 $ .056 $ .063 $ .041 $ .042 $ .036 $ .037 $ .041
Operating expenses+............... .110 .098 .085 .069 .057 .049 .048 .043
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income (loss)...... (.058) (.042) (.022) (.028) (.015) (.013) (.011) (.002)
Unit Value at beginning of year... 3.907 3.389 2.623 2.253 1.706 1.838 1.624 1.495
Net realized and change in
unrealized gains (losses)....... .522 .560 .788 .398 .562 (.119) .225 .131
-------- -------- -------- -------- -------- -------- -------- --------
Unit Value at end of year......... $ 4.371 $ 3.907 $ 3.389 $ 2.623 $ 2.253 $ 1.706 $ 1.838 $ 1.624
======== ======== ======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .46 $ .52 $ .77 $ .37 $ .55 $ (.13) $ .21 $ (.13)
Ratio of operating expenses to
average net assets*+............ 2.85% 2.85% 2.85% 2.84% 2.83% 2.80% 2.82% 2.93%
Ratio of net investment income to
(loss) average net assets*...... (1.49)% (1.21)% (.76)% (1.13)% (.74)% (.72)% (.80)% (.12)%
Number of units outstanding at end
of year (thousands)............. 15,180 16,452 25,865 30,167 45,575 25,109 43,059 20,225
Portfolio turnover rate........... 85% 113% 92% 98% 113% 142% 71% 269%
<CAPTION>
<S> <C> <C>
--------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SELECTED PER UNIT DATA
Total investment income........... $ .044 $ .045
Operating expenses+............... .039 .073
-------- -------
Net investment income (loss)...... .005 (.028)
Unit Value at beginning of year... 1.136 1.189
Net realized and change in
unrealized gains (losses)....... .354 (.025)
-------- -------
Unit Value at end of year......... $ 1.495 $ 1.136
======== =======
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .36 $ (.05)
Ratio of operating expenses to
average net assets*+............ 2.99% 2.64%
Ratio of net investment income to
(loss) average net assets*...... .37% (3.73)%
Number of units outstanding at end
of year (thousands)............. 19,565 5,585
Portfolio turnover rate........... 261% 0%
</TABLE>
* Annualized
** On May 1, 1990, TIMCO replaced Keystone Custodian Funds, Inc. as the
investment adviser for Account TAS.
+ Effective May 1, 1990, market timing fees are included in operating expenses.
Prior to May 1, 1990, market timing fee payments were made by separate check
from a contract owner and were not recorded in the financial statements of
Account TAS, or by contractual surrender to the extent allowed under federal
tax law.
A-10
<PAGE> 59
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES*
PER UNIT DATA FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR
The following information on per unit data for 1997 and prior has been audited
by independent accountants. The consolidated financial statements of The
Travelers Insurance Company and Subsidiaries are contained in the SAI.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income........... $ .000 $ .000 $ .025 $ .033 $ .071 $ .007 $ .054
Operating expenses+............... .000 .000 .011 .015 .031 .006 .036
------- ------- ------- ------- -------- ------- --------
Net investment income............. .000 .000 .014 .018 .040 .001 .018
Unit Value at beginning of year... 1.273 1.273 1.232 1.383 1.215 1.234 1.132
Net realized and change in
unrealized gains (losses)....... .000 .000 .027 (.169) .128 (.020) .084
------- ------- ------- ------- -------- ------- --------
Unit Value at end of year......... $ 1.273 $ 1.273 $ 1.273 $ 1.232 $ 1.383 $ 1.215 $ 1.234
======= ======= ======= ======= ======== ======= ========
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .00 $ .00 $ .04 $ (.15) $ .17 $ (.02) $ .10
Ratio of operating expenses to
average net assets**+........... -- -- 3.00% 3.00% 3.00% 3.00% 3.00%
Ratio of net investment income to
average net assets**............ -- -- 3.64% 3.48% 3.98% 1.02% 1.48%
Number of units outstanding at end
of year (thousands)............. -- -- -- -- 11,466 -- 20,207
Portfolio turnover rate........... -- -- 129% 153% 117% -- 190%
<CAPTION>
<S> <C> <C> <C>
------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
SELECTED PER UNIT DATA
Total investment income........... $ .051 $ .052 $ .072
Operating expenses+............... .032 .031 .018
-------- -------- --------
Net investment income............. .019 .021 .054
Unit Value at beginning of year... 1.087 .994 1.036
Net realized and change in
unrealized gains (losses)....... .026 .072 (.096)
-------- -------- --------
Unit Value at end of year......... $ 1.132 $ 1.087 $ .994
======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL
DATA
Net increase (decrease) in unit
value........................... $ .05 $ .09 $ (.04)
Ratio of operating expenses to
average net assets**+........... 2.99% 3.00% 2.58%
Ratio of net investment income to
average net assets**............ 1.71% 3.07% 3.88%
Number of units outstanding at end
of year (thousands)............. 21,868 19,521 14,115
Portfolio turnover rate........... 505% 627% 370%
</TABLE>
* This Fund is not available to new Contract Owners, and had no assets in
1999. Therefore, there is no 1999 Annual Report for Account TB.
** Annualized
*** On May 1, 1990, TAMIC replaced Keystone Custodian Funds, Inc. as the
investment adviser for Account TB.
+ Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner, and were not recorded in the financial
statements of Account TB, or by contractual surrender to the extent allowed
under federal tax law.
A-11
<PAGE> 60
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 61
APPENDIX B
- --------------------------------------------------------------------------------
THE FIXED ACCOUNT
The Fixed Account is secured by part of the general assets of the Company. The
general assets of the Company include all assets of the Company other than those
held in the Separate Account or any other separate account sponsored by the
Company or its affiliates. In the Contract, we refer to this account as the
"flexible annuity account."
The staff of the SEC does not generally review the disclosure in the prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account and the
general account may, however, be subject to certain provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus.
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of the Separate Account or any of
the funding options does not affect the Fixed Account portion of the contract
owner's contract value, or the dollar amount of fixed annuity payments made
under any payout option.
We guarantee that, at any time, the Fixed Account contract value will not be
less than the amount of the purchase payments allocated to the Fixed Account,
plus interest credited as described above, less any applicable premium taxes or
prior surrenders. If the contract owner effects a surrender, the amount
available from the Fixed Account will be reduced by any applicable withdrawal
charge as described under "Charges and Deductions" in this prospectus.
Purchase payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of the Securities Act
of 1933 or Investment Company Act of 1940. We will invest the assets of the
Fixed Account at our discretion. Investment income from such Fixed Account
assets will be allocated to us and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to us includes compensation
for mortality and expense risks borne by us in connection with Fixed Account
Contracts. The amount of such investment income allocated to the Contracts will
vary from year to year in our sole discretion at such rate or rates as the
Company prospectively declares from time to time.
The initial rate for any allocations into the Fixed Account is guaranteed for
one year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. We also guarantee that for the life of the
Contract we will credit interest at not less than 3.5% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3.5% per year
will be determined in our sole discretion. You assume the risk that interest
credit to the Fixed Account may not exceed the minimum guarantee of 3.5% for any
given year.
TRANSFERS
Under nonqualified contracts, you may make transfers from the Fixed Account to
any other available funding option(s) twice a year during the 30 days following
the semiannual anniversary of the Contract effective date. The transfers are
limited to an amount of up to 10% of the Fixed Account Value on the semiannual
Contract effective date anniversary. (This restriction does not apply to
transfers from the Dollar Cost Averaging Program or to transfers under qualified
contracts.) We reserve the right to waive this restriction.
Automated transfers from the Fixed Account to any of the funding options may
begin at any time. Automated transfers from the Fixed Account may not deplete
your Fixed Account value in a period of less than twelve months from your
enrollment in the Dollar Cost Averaging program.
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APPENDIX C
- --------------------------------------------------------------------------------
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to The Travelers Insurance Company. A list of the
contents of the Statement of Additional Information is set forth below:
Description of The Travelers Insurance Company and The Separate Accounts
The Insurance Company
The Separate Accounts
Mixed and Shared Funding
Investment Objectives, Policies and Risks
Description of Certain Types of Investments and Investment Techniques
Available to the Separate Accounts
Investment Restrictions
The Travelers Growth and Income Stock Account For Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable
Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
Investment Management and Advisory Services
Advisory Fees
TIMCO
TAMIC
Valuation of Assets
Net Investment Factor
Federal Tax Considerations
Performance Data
The Board of Managers
Administrative Services
Distribution and Principal Underwriting Agreement
Securities Custodian
Independent Accountants
Financial Statements
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2000 (FORM NO.
L-11165S) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE CLIP THIS
COUPON ON THE DOTTED LINE, ENTER YOUR NAME AND ADDRESS IN THE SPACES PROVIDED
BELOW, AND MAIL TO: THE TRAVELERS INSURANCE COMPANY, ANNUITY SERVICES, ONE TOWER
SQUARE, HARTFORD, CONNECTICUT 06183-5030.
Name:
Address:
C-1
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THE TRAVELERS UNIVERSAL ANNUITY
INDIVIDUAL AND GROUP
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
L-11165 Printed in U.S.A.
TIC Ed. 5-2000